It is reported that German Chancellor Ms Angela Merkel has warned the nation of greater economic difficulties in the New Year, saying the country is not out of the woods yet and the impact of the global financial crisis may even get worse in the coming months.

She said in a radio and TV address to the nation “We cannot expect that the economic downturn will soon be over. Certain things may even get worse in the New Year before getting better again.”

She emphasized “2010 will decide how we come out of the crisis.”

However, the Chancellor struck a note of optimism, saying Germany has good reasons to hope that it will efficiently manage the worst financial crisis in its post-war history. She added that “To achieve this goal, the government will take immediate steps to introduce new rules for financial markets.”