Deteriorating security in Afghanistan, excitement over Barack Obama's visit to Berlin and fear of an economic disaster despite record employment figures -- Germany's 2008 was marked by ups and downs.

In northern Afghanistan, the situation greatly deteriorated for German troops in 2008. Record attack numbers caused several casualties, and terrorist groups published videos demanding Berlin pull out its roughly 3,500 troops.

The German government has had trouble communicating the mission's importance to the general public -- critics say Berlin has for too long tried to present the mission as a humanitarian one, ignoring the fact that a pretty ugly war is being waged in Afghanistan.

This has been criticized by the opposition, but support for the mission remains strong. Germany's lawmakers agreed to extend it for one more year and gave the green light to increase the maximum number of troops in Afghanistan by 1,000 to 4,500.

The following year will likely see more commitments, however: The new U.S. government is expected to demand greater contributions from its allies in Europe to de-burden its own military.

President-elect Barack Obama prepared Germans for these commitments as early as this summer, when he made a much-awaited campaign stop in Berlin. Some 200,000 Germans turned out for Obama's speech at the Victory Column and celebrated him like a rock star.

He reminded Europe of the "shared destiny" when it comes to winning wars in Afghanistan and Iraq. The Western powers should also share the "sacrifice," Obama added.

He warned Germans, who overwhelmingly despise outgoing U.S. President George W. Bush, that "the change of leadership will not take away this burden."

"We must renew the resolve to rout the terrorists in Afghanistan," he said. "For our shared security, the work must be done. - The Afghan people need our troops and your troops."

Germany's economic year -- at least before the global financial crisis hit -- was cheerful. Unemployment fell to a record post-reunification low, and Germany once again became export world champion, even ahead of rising star China.

Yet toward the end of the year gloomy outlooks tainted the headlines, with several economic forecasts predicting a record recession for 2009 and significant job losses.

Germany has only cautiously tried to steer against this trend, critics say.

The European press blasted Chancellor Angela Merkel for her cautious approach regarding the European stimulus package initiated by French President Nicolas Sarkozy. Preaching fiscal sanity, Merkel refused to join what she called "frantic attempts" to outbid each other with aid packages.

Once hailed for her hands-on approach when it comes to diplomatic disputes, Merkel was all of a sudden labeled "Ms. No" by the French and British press. Merkel has had her reputation tarnished in 2008, and she will have to try to polish it next year as Germany's 2009 is a truly political one, marked by the country's federal elections next fall.

Merkel, of the center-right Christian Democratic Union, will run for re-election against her foreign minister, Frank-Walter Steinmeier, who is the candidate for chancellor for the center-left Social Democratic Party.

Observers predict a feisty campaign despite the fact that both parties will continue to govern the country in an awkward grand coalition that since late 2005 has united two traditional rivals.

Much reform momentum has been lost because of internal bickering, and some observers hope that the pendulum will swing more visibly toward one side or the other, to free the way for more ambitious governing.