German and Spanish economies turn down

I noted last month that German industrial production fell 2.4% in May, and that Chancellor Angela Merkel was expecting ‘a significant fall’ in economic growth for 2009. This fall now seems to be already underway. Industrial output fell by a further 2.9% in June, and for the seventh month in a row – the longest period of decline for nearly 20 years. German officials are also indicating that GDP fell by around 1% in Q2.
The specific problem in Germany is a lack of export orders. In Spain, the economy is also facing recession, as housing market problems spread to the wider economy. Manufacturing output fell 9% in June, and H1 industrial output was down 3.1%. As a result, the Bank of Spain is now forecasting GDP at 0% for 2008.
A multi-year global downturn seems more and more likely, as the major Western economies all appear to be running out of steam simultaneously.

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