German economy shrank 4.8 percent in 2009


Berlin : The German economy shrunk by 4.8 percent last year as the global financial crisis engulfed Europe’s economic powerhouse, the nation’s statistics office is forecast to say Wednesday.

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But the sharp contraction in 2009 was less than the more dramatic forecasts laid out a year ago as fears grew that the implosion of the US investment bank Lehman Brothers in September 2008 would push the world economy to the brink.

Indeed, the release of the new annual German gross domestic product data will coincide with the statistics office publishing figures, which many analysts expect will show Europe’s biggest economy grew quarter on quarter by a modest 0.5 percent in the final

three months of 2009.

However, Tuesday’s data is also likely to show the German economy slowing as last year drew to a close.

The German economy grew by 0.7 percent in the third quarter after it emerged from its deepest recession in a generation to post a 0.4-percent expansion rate in the three months to the end of June amid predictions of the nation’s recovery gaining traction this year.

Either way, the forecast pickup in German economic growth in part reflects the success of Berlin’s 85-billion-euro ($126-billion) emergency fiscal stimulus plan in shielding the economy from recession.

Germany’s wholesale and export association (BGA) predicted Tuesday that the economy could grow between 2.5 percent and 3 percent this year largely driven by a rise in exports.

But casting a shadow on Germany’s outlook is the fear that rising unemployment in the coming months might dampen private consumption.

Weak private consumption could in turn undercut Germany’s recovery from what has been its biggest downturn in a generation.