Recession Times

German economic growth slowed to 1.3 percent in 2008 amid indications of a sharp slowdown this year, the Federal Statistics Office announced.

After turning in a solid 2.5-percent growth rate in 2007, Germany slumped into a recession in the third quarter last year.

A slew of data showed the slowdown in Europe's biggest economy rapidly gaining momentum as the year came to a close.

Fourth-quarter expectations

In the first quarter of 2008, gross domestic product (GDP) rose a strong 1.4 percent, only to decline by 0.4 percent in the second quarter and 0.5 percent in the third quarter.

The figure for the fourth quarter is not due to be released until February, but economic experts expect it to dip as much as 2 percent from the previous three months.

Analysts fear the German economy could contract as much as 2.2 percent this year as the nation sinks into its worse economic downturn since the end of World War II.

Last week the nation's statistics office said German exports, which are a key pillar of the country's GDP, plunged by a dramatic 10.6 percent in November.

As the world's leading export nation, Germany appears particularly vulnerable in the face of a rapidly slumping world economy.

Increased unemployment

At the same time, officials at the ministry of economics and technology said both factory orders and industrial production fell more than expected in November.

The release of the latest German GDP figure comes just a day before the European Central Bank is expected to deliver another cut in interest rates to help spur economic growth in the 16-member euro zone.

Meanwhile, the German Labor Office said unemployment rose for the first time in nearly three years in December, pushing the seasonally adjusted jobless rate up to 7.6 percent from 7.5 percent in November.

Modest retail sales increase

However, German retail sales posted a bigger-than-forecast 0.7 percent rise in November, the nation's statistics office said, as falling oil prices helped the country's consumers to defy the growing global economic gloom and spend in the run-up to Christmas.

Analysts had forecast a more modest 0.5-percent month-on-month increase in seasonally adjusted retail sales during November.