Germany

Against the backdrop of the global recession and the financial market crisis, GDP in Germany contracted by 5.0% in the year under review. Owing to its strong export orientation the German economy suffered under softer international demand. From the second quarter onwards the situation recovered somewhat as exports stabilised and thanks to the car scrappage scheme, which had a positive effect on consumption. Economic activity was fostered by fiscal stimuli and a continued expansionary monetary policy. Unlike in most countries, a massive surge in unemployment was avoided – in large measure thanks to short-time working arrangements. By the beginning of 2010 the German economy had entered a period of recovery, although it remains in a highly fragile state.