Berlin - Germany, the first of the G7 powers to declare an official recession, can expect more bad news on the economic front in 2009, Chancellor Angela Merkel said in an interview released Saturday.

"We have to be prepared for the fact that the coming year, at least in the first few months, will be a year of bad news," she told the newspaper Welt am Sonntag.

She said the current business climate made it much more difficult to predict how the economies of Germany, its partners in Europe and the world at large would develop.

The world financial crisis has pushed the global economy into a tailspin, forcing Berlin and other governments to unveil stimulus packages aimed at underpinning economic growth. Germany also announced a 500-billion-euro rescue plan to help its financial sector weather the current upheaval.

"We have managed to stabilize financial markets with our measures to help the banking sector, but confidence still needs to be restored so that the so-called interbank market can function normally once again," Merkel said.

She said her government's economic stimulus package agreed two weeks ago was intended to build a bridge between consumers and businesses "so that things can move forward in 2010."

Berlin expects the 12 billion-euro-package to result in a bigger 50-billion-euro boost to consumption and investment. The packages includes steps to encourage investment in energy-efficient buildings and incentives for car buyers.

Data released last week showed the German economy tipping into recession, with growth shrinking by a bigger-than-forecast 0.5 per cent during the third quarter, on top of a 0.4-per- cent contraction in the second quarter.

A slew of major indicators and data to be published next week are forecast to confirm the economic deterioration is underway in Germany with business confidence declining again and the long run of falling unemployment in the country coming to an end.

On Friday, the government said a decline in tax revenue as a result of the contraction in Europe's biggest economy had forced it to boost borrowings by 10.5 billion euros to meet plans for spurring growth. (dpa)