Germany's sharp fourth quarter economic contraction was powered by a 7.3 percent slump in exports, which had long been the mainstay of the country's growth, government data showed Wednesday. The Federal Statistical Office confirmed its initial Feb. 13 estimate that the recession in Europe's biggest economy deepened dramatically in the October-December period, with gross domestic product shrinking by 2.1 percent compared with the previous quarter. It said exports declined by 7.3 percent in the quarter, while imports were down 3.6 percent. The resulting balance of exports and imports knocked two percentage points off GDP, accounting for nearly all of the overall contraction, the office said. German businesses' investment in machinery, equipment and vehicles declined by 4.9 percent following eight consecutive quarterly increases. The data underlined a recent string of dismal monthly reports on exports, industrial orders and production. The fourth-quarter GDP decline was the third in a row, and the economy is expected to contract sharply this year. In a separate report Wednesday, the statistical office said that Germany's budget deficit shrank to 0.1 percent of GDP last year - half the 2007 level. Germany has worked hard to reduce its deficit after exceeding the maximum 3 percent - stipulated for euro zone countries - for several years earlier in the decade. However, it is expected to grow again this year as the government implements multibillion-euro economic stimulus plans.
