The German economy grew by just 0.6 per cent in 2001 in its worst performance for nearly a decade, confirming that Europe's one-time economic powerhouse entered an election year in reverse gear.
The Federal Statistics Office said the slowdown in gross domestic product growth from the three per cent recorded in 2000 resulted from lower exports and investment amid a global slowdown, aggravated by the September 11th attacks on US cities.
"The slowdown set in mid-year and continued throughout the year," Mr Johann Hahlen, head of the statistical office said in a statement. At the end of 2000 our forecast was between 2.5 and 3.0 per cent.
The office did not provide any data for the fourth quarter, but the annual figure was the poorest since the 1993 downturn, when the economy shrank 1.1 per cent. It indicated that Europe's biggest economy slipped into recession after grounding to a halt around mid-year.
The statistical office also reported the sharp slowdown pushed last year's budget deficit to 2.6 per cent, well above the original 1.5 per cent target.
It was uncomfortably close to the three per cent ceiling set by the European Union's Stability and Growth Pact that is a key backbone of the monetary union.
The German government is expected to revise down growth expectations for this year to around 0.75 per cent, meaning Germany will keep trailing its 11 euro zone partners.
Germany, where one in five jobs depends on exports, tends to suffer more than other economies in times of global downturn.
The jobless lines are expected to swell further, with German labour office chief Mr Bernhard Jagoda predicting earlier this week the number of unemployed peaking at 4.3 million this month or next from just below four million recorded in December.