German economy shrank five per cent during 2009

By DAILY MAIL REPORTER
Updated:

Germany's economy contracted five per cent in 2009 as the global economic downturn brought about a slump in exports and investment, official data released today shows.

Exports were down a price-adjusted 14.7 per cent, while imports fell 8.9 per cent in the worst annual performance for the German economy since World War II.

The five per cent figure published by the German Federal Statistical Office was in line with government predictions but slightly worse than the 4.8 per cent contraction widely predicted by economists.

Audi car factory

Slump: Germany saw a sharp fall in exports during 2009

"Foreign trade, which in previous years had been a major driving force for growth in the German economy, slowed down economic development in 2009," the office said in a statement.

The German government is predicting growth of 1.2 per cent in 2010.

Germany's export-dependent economy technically emerged from a deep recession in the second quarter of 2009, but today’s figures show that the country's companies and workers still face slack demand and rising unemployment.

Analysts were cautiously optimistic over the country’s prospects following today’s figures. Analyst Timo Klein, with IHS Global Insight, was upbeat but also warned that the situation could change quickly.

"The current German upswing will continue in 2010 but stay modest in scope - we predict 1.5 percent GDP growth," he said. "A risk lingers that there will be a renewed setback around midyear, depending on the strength of the global demand recovery."

The 2009 contraction was the first since 2003, when the economy shrank by 0.2 per cent. The previous worst post-war performance was a 0.9 per cent decline in West Germany's gross domestic product in 1975.

Most watched Money videos