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January 13, 2010    

German economy contracts record 5% in 2009

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by Kay Murchie
German economy contracts record 5% in 2009

The Federal Statistics Office has today revealed that the German economy, which is Europe’s largest, contracted by a record 5% in 2009 - the first time in six years the economy had shrunk and the deepest since World War II.

The record contraction was due to a slump in demand in exports and investment.

In 2009, exports plunged by 14.7% on the year, while investment in equipment fell by one fifth.

Germany has been the world’s largest exporter for a number of years but it emerged over the weekend that China had overtaken it after official figures recently revealed that Chinese exports soared 17.7% on an annual basis in December, while imports rose 55.9%.

In the meantime, Germany was one of the first major economies to exit recession after experiencing positive growth in the second quarter of 2009.

The economy expanded by 0.7% quarter-on-quarter in the third quarter of 2009 and by 0.4%.

The German Government is predicting growth of 1.2% in 2010 and economists are cautiously optimistic about Germany’s growth prospects.

Carsten Brzeski at ING Financial Markets comments: “Looking ahead, the recovery will continue this year. With GDP growth above 2%, we expect the German economy to be the growth engine of the euro zone in 2010.”

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