Germany's economy unexpectedly shrank in the final quarter of last year to deal a blow to euro zone recovery hopes, preliminary German Federal Statistics Office data showed today.
The GDP of Europe's biggest economy contracted 0.2 per cent from the previous quarter, and revised data showed there had been no growth at all in the July through September period.
The statistics office had originally reported third quarter growth of 0.1 per cent.
"This really is a pretty catastrophic figure," said MM Warburg economist Mr Carsten Klude. "It shows the domestic economy is just not getting into gear."
It was the economy's first quarterly contraction since the second quarter of 2003.
The consensus forecast of economists was for growth of 0.2 per cent in the fourth quarter, and analysts said the data cast a shadow over preliminary euro zone GDP data due later today.
Germany accounts for around a third of the euro zone economy, which economists last week predicted would grow 0.4 per cent in the fourth quarter. Economists were also disappointed at revisions to previously reported German data.
The German Federal Statistics Office also cut its estimate of full year 2004 GDP growth to 1.6 per cent from 1.7 per cent, which could dash the government's hopes of reporting a lower budget deficit to Brussels.