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Last Updated: Thursday, 15 May, 2003, 06:41 GMT 07:41 UK
Germany on brink of recession
Chancellor Gerhard Schroeder in Vietnam
Chancellor Schroeder is in Asia to drum up business
The German economy shrank slightly during the first three months of the year, pushing Europe's largest economy yet again to the brink of recession.

Weak exports were mainly to blame for the economy's poor performance, according to the Federal Statistics Office.

The total value of goods and services produced in Germany fell by 0.2% between January and March. This follows a "minus 0%" growth in the last quarter of 2002.

A recession is usually defined as two consecutive quarters of negative growth.

The figures are worse than expected, with most analysts having forecast a poor but at least positive growth rate of 0.1%.

However, compared to the same period a year earlier, the German economy grew by 0.5%.

The state of the economy has pushed unemployment in Germany well above the 4 million mark and hurt the electoral fortunes of Chancellor Gerhard Schroeder's Social Democrats.

Mr Schroeder hopes that a package of wide-ranging structural reforms can kick-start the economy, but both union and business leaders are putting up fierce resistance against measures that would hurt their constituencies.

Figures from the Statistics Office show that there is still a long way to go.

Official data show that Germany's economy now provides nearly half a million fewer people with work than it did a year ago.

Germany has flirted with recession before, narrowly avoiding it a year ago by rounding up a very small negative number to read as zero growth.

The German economy makes up about a third of the economy of the 12-country eurozone.




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SEE ALSO:
Germany mulls cash injection
11 Mar 03  |  Business
Schroeder's economic headache
06 Mar 03  |  Business
Country profile: Germany
07 Mar 03  |  Country profiles


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