Nasty numbers

To begin with today I'd like to give you a tip: go out and buy a new, bigger sofa. If you are feeling adventurous, you might also want to buy shares in firms that produce sofas.

More about that later. What I really want to talk about here is numbers.

I love numbers in all their forms: cardinal numbers (one, two, three); ordinal numbers (first, second, third); percentages (15.2 per cent); football scores (3-2, to my team, of course); cricket scores (350-2); tennis scores (40-30). You name it, I love them. ("Love" is also a number in tennis, meaning zero.)

But my love affair with numbers is in serious danger of coming to an abrupt end when I look at the recent economic statistics. The numbers I see are not nice. Indeed, they are very nasty.

At the end of last year, the German economy was expected to shrink by up to 2 per cent in 2009. This may not sound like a lot, but an article in Handelsblatt made clear what this would mean: a fall in gross domestic product (GDP) of €51 billion. This is equivalent to 2.5 million Volkswagen Golf cars, or €620 per head.

Now even that seems optimistic. Germany's GDP fell by 2.1 per cent in the fourth quarter of 2008 alone. That is an annualized fall of more than 8 per cent.

Like Germany, Japan, the world's second-largest economy after the US, has been hit by the dramatic downturn in world trade. The annualized fall in Japan's GDP in the last three months of 2008 was 12.7 per cent, the worst slump in 35 years.

Other numbers are even scarier. Russia's industrial output plunged 20 per cent in January. China's exports fell by 17.5 per cent in January compared to a year earlier and its imports by 43.1 per cent.

Orders in Germany's engineering sector also dropped 40 per cent in December. Meanwhile, housing starts in the US fell by 16.8 per cent in January alone, and were 56.2 per cent lower than a year earlier.

I could go on but I won't, as it's just too depressing. The point is that the economic downturn is much more severe than most people thought, and it is likely to get worse.

As I said, my love for numbers is dwindling. And that big sofa I recommended? Well, this is for you to hide behind when the next nasty numbers are announced. That's probably the safest place to be.