German 1Q GDP Posts Sharpest Fall Since 1970

07:38 15May09 German 1Q GDP Posts Sharpest Fall Since 1970


FRANKFURT--German gross domestic product in the first quarter posted its sharpest fall since records began in 1970, as economic activity was much weaker than expected, data from the Federal Statistics Office showed Friday.

First-quarter real GDP shrank 3.8% from the fourth quarter of 2008, below economists' forecasts of a 3.2% fall. The quarterly data are adjusted for
seasonal and calendar effects.

That was the fourth straight quarterly decline in GDP, underpinning the view that Europe's largest economy will contract by as much as 6% this year.

"The recession has returned the German economy to its size of late-2005, and the last three years of economic growth have gone up in smoke," said Carsten Brzeski, an economist at ING Bank.

German GDP contracted a downwardly revised 2.2% in the last three months of 2008.

Data Thursday showed that Spain's economic output fell at its fastest rate on record in the first quarter, indicating that the euro zone had a dismal start to 2009.
The euro fell on the weak German numbers.

At 0611 GMT, the euro traded at $1.3605, compared with $1.3630 minutes ahead of the data.
"The worst part of the recession can now be seen in the rearview mirror but the road to recovery remains bumpy and long," Brzeski said.

German GDP shrank 6.9% in the first quarter from the year-earlier period, when adjusted for the number of working days each year.
Lower investment and a drop in net exports depressed economic activity, the statistics office said. Private consumption, however, increased slightly.

No further details were available. The statistics office will publish a
breakdown of German GDP data May 26.