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According to official predictions, Germany's economy will contract by 2.25 per cent during 2009, plunging the country into its deepest recession since the second world war.
In its annual economic report, which was approved by the cabinet today (January 21st), the economy faces its biggest challenge since the reunification of the country.
"The short-term growth outlook has deteriorated drastically," the report said, adding: "The German economy is, due to its strong dependency on exports, especially affected by falling demand among trading partner countries and the sudden crisis on financial markets."
In other news that may be of interest to stock market traders in Europe, Germany has said it could throw its support behind "very limited" use of reduced value added tax rates within the European Union (EU).
The EU has deferred a decision on the issue until March.
