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Monday 01st of June 2009
February 13, 2009

Germany hit by record quarterly contraction


by Kay Murchie
”Germany

Figures from the Federal Statistics Office have revealed Germany’s economy contracted by 2.1% in the fourth quarter of 2008 - its worst quarterly performance since German reunification in 1990.

Germany, which is Europe’s largest economy, has been hit by a slump in manufacturing and the Federal Statistics Office said the contraction was led by a fall in investment and net trade.

According to Bundesbank, Germany’s economy had never previously contracted by more than 1.2% and the fourth quarterly fall of 2.1% was much worse than the 1.8% anticipated by analysts.

On an annual basis, the German economy shrank by 1.6%, after increasing by 1.4% in the July to September period. The economy entered a recession late last year, while the euro zone, as a whole, entered recession in November.

However, all 16 countries which use the euro, have seen their economies contract. France’s economy contracted by 1.2% in the fourth quarter but was only marginally worse than the 1.1% anticipated by analysts.

Today’s figures will put pressure on the European Central Bank (ECB) to cut rates. The ECB kept the rate unchanged in February after lowering it to 2% in January. The next meeting is on 5 March.

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