New figures today confirmed that Germany, Europe's largest economy and the world's top exporter, is in recession. The nation's GDP contracted 0.5% in the third quarter, far worse than predicted and the biggest decline in growth in 12 years. The magnitude of the German contraction pushed the euro down to $1.23 and fanned speculation that the European Central Bank will cut interest rates again by at least 50 basis points, Bloomberg reports.
Companies are scrambling to revise forecasts and shave jobs. At Siemens, the continent's biggest engineering company, 16,750 workers will be laid off. The worst is yet to come, several economists predicted. One analyst at Deutsche Bank said that Germany faces "a long, drawn-out recession"—worse than at any time since World War II. "Unfortunately, we don't see any respite any time soon," he added. "Where should the growth come from?"