German economy shrinks in Q4

Germany, Europe's largest economy, contracted 0.5-per cent in the fourth quarter compared over the previous quarter, according to preliminary figures released by the federal statistical office, released yesterday.

The decline, which would be the largest quarterly fall since 2009, was more than expected, as German companies cut back investments amid continuing uncertainties due to the eurozone debt crisis and the global economic slowdown.

In the third quarter, the German gross domestic product (GDP) had risen 0.2 per cent, after registering a 0.3-per cent growth in the second quarter and a more comfortable 0.5-per cent expansion in the first quarter.

For the full year, the country's GDP increased 0.7 per cent compared with the previous year. The expansion is much slower than the robust 3 per cent growth in 2011 and 4.2 per cent in 2010 when the economy was on a recovery mode following the global financial crisis.

''In 2012 the German economy proved to be resistant in a difficult economic environment and withstood the European recession'', said Roderich Egeler, president of the federal statistical office at a press conference in Wiesbaden yesterday.

Although the statistical office has not presented the exact figure for the fourth quarter, it said the economy shrank roughly half a percentage point compared to the third quarter. The official data for the quarter will be released next month.