The Meltdown Blog

German exports in January fell 4.4 percent from December (adjusted for working days and seasonal changes) and 20.7 percent compared to January 2008. The latter figure is the worst in 16 years and reveals the difficulties Germany's export-oriented economy is currently facing.

With no solution in sight, Financial Times columnist Wolfgang Münchau wrote yesterday that Germany is "looking at an L":

an L-shaped recession, [...] starts with a steep decline, followed by very low growth for many years. [...] My guess is that we are currently somewhere in the middle of the vertical bit of the L, but it is the horizontal bit that is the scariest.

He predicts that "US consumers and banks will spend the next five or more years deleveraging" and suggests that the world’s largest exporters - Germany, China and Japan - should reduce their "dependency on exports and undertake structural reforms that facilitate the shift towards non-tradable goods".