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Last Updated: Thursday, 11 November, 2004, 08:34 GMT
Slowing exports hit German growth
VW cars stacked for distribution
Exports have driven the German economy
Germany's economic growth has slowed as export weakness offset a rise in domestic demand.

According to the Federal Statistics Office, the German economy grew just 0.1% in the three months to September, slower than expected.

The figure is the lowest since the outright contraction in the second quarter of 2003.

Economists said the news meant growth figures for the 12-nation eurozone, out on Friday, would also be revised down.

Dollar pressure

The 0.1% expansion - making an annual growth rate of 1.3% - follows a 0.4% reading for each of the first two quarters of the year.

"The decisive factor in the weak economic growth in the third quarter was - in contrast to the four preceding quarters - declining exports," the statistics office said.

High oil prices are partly to blame, economists say.

But the sinking value of the dollar also poses a threat, according to the ZEW survey of finance professionals.

The German economy is reliant on healthy exports, and a falling dollar makes euro-denominated goods more expensive in the key US market.

Stubbornly high unemployment has meant weak demand at home, although the third quarter has shown an improvement.

Government efforts to rejig the benefits and pensions system, with the intention of reinjecting some life into the labour market, are meeting staunch resistance.

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