The German economy contracted by 0.5 per cent in the second quarter of 2008, official data showed today.
The quarterly decline, which was adjusted for seasonal, calendar and price effects, was the biggest since the first quarter of 2003, when GDP also contracted by 0.5 per cent, the Federal Statistics Office said.
The office revised down the first quarter GDP reading to growth of 1.3 percent after 1.5 per cent previously reported.
"The economic development in the second quarter was marked by declining consumption by private households and diminished plant investment," the office said in a statement.
"Construction investment was, in particular, significantly lower than in the first quarter," it added. "Foreign trade was a positive contributor, which can above all be attributed to a significant fall in imports."
In the annual comparison, German GDP increased by 3.1 per cent in the April to June period after annual growth of 1.8 per cent in the first quarter of 2008, the figures showed.
Adjusted for working days, Europe's largest economy grew by 1.7 per cent on the year. There were three more working days in the second quarter of 2008 than in the same period in 2007.
Corporate Germany is braced for tough economic conditions. Industrial group Siemens late last month posted stronger-than-expected results for the quarter ended June 30th but expected a slowdown ahead.
German tourism and retail group Arcandor yesterday cut its 2008/09 outlook after posting a 20 per cent fall in adjusted third-quarter core earnings as losses at its Karstadt department stores widened.
"This reassessment and modification of the earnings target are the result of a changed overall economic situation and, more particularly, of the earnings weakness in the department-store business in Germany," the company said in a statement.
The government has said it is sticking to its forecast for the economy to grow by 1.7 per cent this year.
The office is due to publish a breakdown of the second-quarter GDP figures on August 26th.
Reuters