German industrial production slumped by more than 2 per cent in October, fuelling fears that Europe's largest economy is sliding to recession. The data were worse than the previous month and exceeded the most pessimistic predictions from economists.
With production down more than 4 per cent on the same time last year, he said Germany was "without doubt" in recession, which is technically defined as two quarters of negative GDP growth. Germany's GDP shrank by 0.1 per cent in the third quarter.
The finance ministry said falling car sales hit heavily industrialised western German states in particular.
"The latest production slump also affected the industrial sector, while the building sector recovered by 5.5 per cent," said a finance ministry spokesman.
The news is a further blow to the government's hopes of achieving 1.25 per cent growth next year, as laid out in its updated budgetary report submitted to the European Commission this week.
In the report, Germany said it was "realistic" to hope for a balanced budget by the euro-zone deadline of 2004.
However, the government said growth might be only 0.75 per cent next year, pushing back a balanced budget to 2006.
