Germany’s economy contracted for the third successive quarter and by the most in 22 years in the final three months of 2008 as the global financial crisis sapped export demand and companies cut investment.
Gross domestic product dropped a seasonally adjusted 2.1 per cent from the third quarter, when it fell 0.5 per cent, the Federal Statistics Office in Wiesbaden said today.
That’s the biggest decline since the first quarter of 1987. Economists expected a 1.8 per cent contraction.
German companies are scaling back output and cutting jobs as global growth slows and demand for exports wanes. Europe’s largest economy will shrink 2.5 per cent this year, its worst performance since World War II, according to the International Monetary Fund.
“The storm is not over yet,” said Juergen Michels, an economist at Citigroup in London.
“The risks for the first quarter are tilted to the downside and the outlook for the full year remains bleak. I don’t expect an economic stabilization before year-end.”
The fourth-quarter contraction was mainly driven by lower exports and investment, the statistics office said. Consumer spending was “slightly lower” than in the previous quarter while inventories increased “significantly”.
From a year earlier, the economy shrank 1.7 per cent when adjusted for calendar effects.
The euro-region economy probably contracted 1.3 per cent in the fourth quarter from the third, a survey of economists shows.
Bloomberg