Press release No.012 / 2010-01-13

Germany experiencing serious recession in 2009

Concise version

WIESBADEN – The German economy shrank in 2009 for the first time in six years. With –5.0%, the decline in the price-adjusted gross domestic product (GDP) was larger than ever since World War II. This is shown by first calculations of the Federal Statistical Office (Destatis). The economic slump occurred mainly in the winter half-year of 2008/2009. Over the year, there were signs that the economic development would slightly stabilise on the new, lower level. In 2008 the GDP had slightly been up by 1.3%, in 2007 by 2.5% and in 2006 even by 3.2%.

Gross domestic product, price-adjusted, chain-linked
Change on the previous year (in percent):

1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009
+2.0	+3.2	+1.2	+0.0	–0.2	+1.2	+0.8	+3.2	+2.5	+1.3	–5.0

What was striking in 2009 is that both exports and capital formation in machinery and equipment slumped heavily. Foreign trade, which in previous years had been a major driving force for growth in the German economy, slowed down economic development in 2009. While exports were down a price-adjusted 14.7%, the decrease was just 8.9% for imports. Hence the balance of exports and imports made a negative contribution to GDP growth, as it had done in 2008. However, with –3.4 percentage points, it was markedly larger in 2009 than in 2008 (–0.3 percentage points). Gross fixed capital formation in machinery and equipment was down altogether by one fifth compared with 2008 (–20.0%). Gross fixed capital formation in construction decreased by just 0.7% on the previous year. The only positive contribution in 2009 was made by final consumption expenditure: Final consumption expenditure of households was up a price-adjusted 0.4%, government final consumption expenditure rose even markedly by 2.7% on the previous year.

The economic performance was in 2009 on average achieved by 40.2 million persons in employment whose place of employment was in Germany, which was 37,000 persons or 0.1% less than a year earlier.

According to provisional calculations, general government net borrowing amounted to Euro 77.2 billion in 2009. When put in relation to GDP at current prices, this leads to a deficit ratio of 3.2%. Following a balanced budget in 2008, the reference value of 3% of the GDP laid down in the Maastricht Treaty was thus exceeded in 2009 for the first time in four years.

On 12 February, the Federal Statistical Office will release first national accounting results for the fourth quarter of 2009 and the revised results for the year 2009 (GDP only); on 24 February, the detailed results will be published.

Germanyexperiencing serious recession in 2009

Detailed version

1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009
+2.0	+3.2	+1.2	+0.0	–0.2	+1.2	+0.8	+3.2	+2.5	+1.3	–5.0

When examining the calendar-adjusted figures, no visible change in the growth rate is observed (–5.0%) because the number of working days available in 2009 was nearly the same as in 2008.

Gross domestic product, price- and calendar-adjusted, chain-linked
Change on the previous year (in percent):

1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009
+1.9	+3.5	+1.4	+0.0	–0.2	+0.7	+0.9	+3.4	+2.6	+1.0	–5.0

The economic performance was in 2009 on average achieved by 40.2 million persons in employment whose place of employment was in Germany, which was 37,000 persons or 0.1% less than a year earlier. According to provisional estimates based on the labour force survey, the number of unemployed persons (international definition) rose by 169,000 (+5.4%) to 3.3 million.

Although the total number of persons in employment within the economic territory was relatively stable, marked job cuts occurred in some economic sectors. This affected in particular industry (including energy) with –2.7% and financial, real-estate, renting and business activities with –1.5%. However, the number of hours worked on average by every person in employment decreased in nearly all economic sectors. For the overall economy, the number of hours worked per person in employment was down by 2.8% on the previous year. This development suggests that job cuts have not been the main reaction of German economy to the economic crisis. Instead, working hours were often reduced, especially through short-time work, the reduction of working time accounts as well as temporary reductions of weekly working hours as provided for in collective agreements.

This is also shown by the changes in labour productivity: The price-adjusted GDP per person in employment in 2009 was down by 4.9% compared with the previous year; when measured per hour worked by persons in employment, the decrease was 2.2%. That was by far the largest decline in labour productivity since World War II. From 1992 to 2007, the overall labour productivity had even grown continuously.

The production side of the GDP in 2009 was characterised especially by the large decreases in the economic sectors depending on exports. In particular industry (including energy) saw a massive slump: Price-adjusted gross value added was 16.9% lower than a year earlier there. Economic performance in 2009 decreased markedly by 5.1% on 2008 also in trade, transports and communication. In financial, real-estate, renting and business activities (–1.6%) and in construction (–0.7%), the economic performance in 2009 was also down on the previous year. Agriculture, hunting and forestry, fishing (+0.5%) as well as other service activities (+1.0%) were the only sectors recording slight growth rates in the reference year. Altogether, price-adjusted gross value added of all economic sectors in 2009 was down 5.5% on the previous year.

The use side of the GDP in 2009 was characterised by the slump in foreign demand: For the first time since 1993, the exports of goods and services from Germany decreased in real terms from the previous year (–14.7%). At the same time, price-adjusted imports were down by just 8.9%. Consequently, the resulting balance of exports and imports in 2009 recorded another negative contribution to growth with –3.4 percentage points (2008: –0.3 percentage points) and considerably slowed down the economic development.

Following three years of considerable dynamism, capital formation, too, was markedly down in 2009 compared with 2008: Gross capital formation, which is composed of gross fixed capital formation – that is mainly gross fixed capital formation in machinery and equipment and gross fixed capital formation in construction – and changes in inventories, decreased by a price-adjusted 12.5%. A major factor contributing to that downward trend was gross fixed capital formation in machinery and equipment, which was down for the first time in seven years, showing a clear slump in 2009 (–20.0%). Gross fixed capital formation in construction, however, declined just slightly by 0.7%. Changes in inventories, too, provided a negative contribution to GDP growth (–0.8 percentage points).

Only final consumption expenditure contributed a slightly positive impetus in 2009: Final consumption expenditure of households and NPISHs grew a price-adjusted 0.4% and government final consumption expenditure by even 2.7% on a year earlier. Distinguishing final consumption expenditure of domestic households by purpose, however, clearly shows that expenditure was markedly up on the previous year only for transport and communications (+5.2%). This includes private purchases of motor vehicles, which rose considerably as a result of the so called scrapping bonus. Expenditure for nearly all other purposes, however, was smaller than in 2008. What was particularly significant was the decrease in real expenditure on hotels and restaurant services (–3.0%).

At current prices, the gross domestic product was down to Euro 2,404 billion in 2009 (–3.7%). The gross national income recorded a similar decrease (–3.5%) to Euro 2,447 billion.

The net national income (factor costs) consists of compensation of employees and property and entrepreneurial income. In 2009 it decreased for the first time since German unification, that is by 4.0% to Euro 1,811 billion. Compensation of employees was just slightly below previous year’s level (–0.2% to approximately Euro 1,223 billion). However, property and entrepreneurial income fell markedly by 11.0% to just Euro 588 billion. Consequently, the wage ratio, that is the share of compensation of employees in the net national income (factor costs), rose by 2.5 percentage points compared with 2008 to 67.5%.

Gross wages and salaries decreased by 0.5% in 2009 and totalled just under Euro 991 billion. That decrease – which is the first since 2005 and the largest since German unification – reflects especially the pay cuts of 2009 which were caused, among other things, by reductions of working hours and of remuneration. What was also down is the income tax paid by employees (–2.4%). The overproportional decline in the amount of income tax is mainly due to tax progression as, for short-time workers, parts of the remuneration that are taxed above average were lost. At the same time, employees’ social contributions increased (+3.4%). This is particularly due to the additional inclusion of expenditure on private health insurance under employees’ social contributions. In calculational terms, net wages and salaries thus decreased by 1.0% to a good Euro 636 billion, so that their decrease was slightly larger than that of gross wages and salaries.
Monthly gross wages and salaries per employee were down by 0.4%, average net wages and salaries by 0.9%. The number of employees (calculated on the basis of the national concept) decreased just slightly by 0.1%.

In 2009, the disposable income of households increased by just 0.4% to approximately Euro 1,564 billion. This was the lowest growth rate since German unification. Contrary to the previous two years, the increase in final consumption expenditure of households at current prices (+0.5%) in 2009 was slightly larger than that of disposable income. The saving ratio of households (11.2%) remained at previous year’s high level.

According to provisional calculations, general government – consisting of central government, Länder (federal states), local government and social security funds – recorded net borrowing of Euro 77.2 billion in 2009. When put in relation to the gross domestic product at current prices, this is a 3.2% deficit ratio of general government. Following a balanced budget in 2008, the reference value of 3% regarding the ratio between public deficit and gross domestic product as mentioned in the Maastricht Treaty was thus exceeded in 2009 for the first time in four years. Net borrowing of general government in 2009 resulted, first, from decreasing revenue (–2.2%), with tax revenue falling most sharply. Second, expenditure rose markedly (+5.0%). While the tax loss can be considered as a consequence of the economic downturn, the expenditure side is influenced mainly by the support measures of the government.

On 12 February 2010, the Federal Statistical Office will publish first national accounting results for the fourth quarter of 2009 and the revised results for the year 2009 (only GDP); on 24 February 2010, the detailed results will be released.

The results published in August 2009 for the years 1991 to 2008 have not been revised, as is always the case at this time of the year.

National accounts data may be accessed via the internet. In addition, more detailed results are published in Fachserie 18 "National Accounts", Series 1.1 "First Annual Results" (order number 2180110). The above and other publications can be downloaded free of charge from the publication service. A comprehensive quality report on national accounts is also available for free via the internet.

Gross domestic product, gross national income and
net national income (factor costs)
	2006	2007	2008	2009
Change on the previous year in %
Use of the gross domestic product
At current prices
Final consumption expenditure of households and NPISHs	2.3	1.4	2.5	0.5
Government final consumption expenditure	1.6	2.2	3.7	4.5
Gross fixed capital formation (GFCF)	8.4	7.7	4.2	–9.0
including: GFCF in machinery and equipment	10.6	10.2	2.7	–21.1
GFCF in construction	7.1	6.3	5.8	0.2
D o m e s t i c u s e s	3.3	2.9	3.7	–1.5
Exports	14.4	8.0	3.5	–17.3
Imports	14.9	4.9	5.8	–14.4
G r o s s d o m e s t i c p r o d u c t (GDP)	3.7	4.4	2.8	–3.7
Price-adjusted, chain-linked
Final consumption expenditure of households and NPISHs	1.3	–0.3	0.4	0.4
Government final consumption expenditure	1.0	1.7	2.1	2.7
Gross fixed capital formation (GFCF)	7.8	5.0	3.1	–8.6
including: GFCF in machinery and equipment	11.8	11.0	3.3	–20.0
GFCF in construction	4.6	0.0	2.6	–0.7
D o m e s t i c u s e s	2.2	1.0	1.7	–1.8
Exports	13.0	7.5	2.9	–14.7
Imports	11.9	4.8	4.3	–8.9
G r o s s d o m e s t i c p r o d u c t (GDP)	3.2	2.5	1.3	–5.0
memorandum item:
GDP per hour worked by persons in employment	2.9	0.7	–0.0	–2.2
GDP per person in employment	2.5	0.8	–0.1	–4.9
At current prices
Gross national income	4.7	4.4	2.4	–3.5
Net national income (factor costs)	4.9	3.5	2.5	–4.0
Compensation of employees	1.7	2.8	3.7	–0.2
Property and entrepreneurial income	11.4	4.8	0.2	–11.0
Disposable income of households	2.0	1.6	2.7	0.4
Contributions to growth of price-adjusted GDP in percentage points
Domestic uses	2.1	1.0	1.6	–1.7
Final consumption expenditure of households and NPISHs	0.8	–0.2	0.2	0.2
Government final consumption expenditure	0.2	0.3	0.4	0.5
Gross fixed capital formation (GFCF)	1.4	0.9	0.6	–1.6
including: GFCF in machinery and equipment	0.8	0.8	0.3	–1.6
GFCF in construction	0.4	0.0	0.2	–0.1
Changes in inventories, and so on	–0.2	0.0	0.4	–0.8
Balance of exports and imports (net exports)	1.0	1.5	–0.3	–3.4

>>> brief methodological description

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