Germany faces worst slump since World War II

Thursday brought more negative economic reports.

Bloomberg reports that Germany faces its biggest economic slump since World War II.

Industrial production fell 7.5 percent in January from the previous month, the most on record, a report showed today...

Germany’s economy will shrink 3.7 percent this year, the Kiel-based IfW institute said today, lowering a prediction for a 2.7 percent contraction made in December. Germany’s worst post- war performance so far was a 0.9 percent contraction in 1975.

China's industrial production is also faltering, but bank lending rose sharply in February. Bloomberg reports.

China’s industrial-production growth slowed in the first two months of the year as exports slid at a record pace. Bank lending jumped as the nation’s 4 trillion ($585 billion) stimulus began to take effect.

Output rose 3.8 percent in January and February from a year earlier, slowing from a 5.7 percent increase in December, the statistics bureau said today. New lending quadrupled in February to 1.07 trillion yuan from a year earlier, the central bank said.

In Japan, the economy contracted in the fourth quarter but by less than previously estimated. AFP/CNA reports:

Japan's economy shrank slightly less than initially thought in the fourth quarter of 2008, but still logged its worst performance in almost 35 years as exports collapsed, data showed on Thursday.

The world's second-largest economy contracted 3.2 per cent in the three months to December or 12.1 per cent on an annualised basis, as the global downturn choked off demand for cars, high-tech goods and other exports.

Also less bad than expected were US retail sales. From Bloomberg:

Sales at U.S. retailers in February fell less than forecast and a gain in January exceeded the previous estimate, indicating the biggest part of the economy may be starting to stabilize...

Retail purchases decreased by 0.1 percent following a 1.8 percent jump in January, the Commerce Department said today in Washington. Excluding cars, sales climbed 0.7 percent. The Labor Department said more than 600,000 Americans filed jobless-benefit claims for a sixth straight week, the worst streak since 1982.

Overall, the global economic outlook remains dire and central banks are taking no chances, with several cutting interest rates recently, including New Zealand's and Switzerland's.