German industrial production down; Germany may be in recession; Deutsche Telekom shares take a dive; Aviation industry launches new campaign
The domestic auto market is still waiting for a jump-start
Industrial production in Germany fell again in May, dashing any hopes of an economic recovery in the second quarter of 2003. The economics and labor ministry said seasonally adjusted figures showed production shrank by 0.7 percent. Economists said the new data were a sign that the economy would remain weak in the second quarter. The economics ministry said output was also affected by the Mayday holiday, which fell on a Thursday, with the result that many people also took the Friday off. The notion that the numbers are a sign of worse to come has been backed up by figures from the automobile industry, which show that production fell by a fifth in June. Although exports remain steady, domestic demand for cars is down five percent over last year. The situation was exacerbated by recent strikes by engineering workers in eastern Germany, which in turn affected output in western factories.
Germany in recession?
The German Institute for Economic Research says Germany may be in recession, albeit a mild one. The institute said on Tuesday that it expected the economy to shrink by 0.1 percent in the second quarter, after a similar contraction in the first quarter. That would meet most economists' definition of recession. The institute says it also expects negative growth in Germany for the year as a whole.
Deutsche Telekom shares nosedive
Deutsche Telekom shares took a thrashing on Tuesday after Germany's state-owned development bank, the Kreditanstalt für Wiederaufbau, announced it was issuing a €4.5 billion ($5.1bn.) bond that can be converted into Deutsche Telekom shares. It's the biggest convertible bond issue the world has seen so far. The volume amounts to a 5.8 percent holding in Deutsche Telekom, almost half the bank's share in the company. The German state holds another 31 percent, and the government is in negotiations to park some more of that with the bank. Deutsche Telekom welcomed the move, but its shares dipped by more than four percent in morning trading, and dragged the German stock index, the DAX, into negative territory. In the first hour of trading, more Deutsche Telekom shares changed hands than usually do in a day.
The sky's the limit
The German government, the national airline, Lufthansa, and major airport operators have launched an initiative aimed at boosting air traffic in, to and from Germany. According to the organizers, the project, called "Air Traffic for Germany," aims to find ways to make sure the country's aviation industry remains competitive in the future. It wants to remove bureaucratic and legal obstacles in the industry, as well as encourage the federal government to assume responsibility for services such as airport security and baggage handling, to harmonize procedures nationwide. The industry is also seeking government support for plans to build another runway and terminal at Frankfurt airport.
Complied by DW staff from wire services