Germany suffered its worst recession since World War II last year when Europe's largest economy contracted by five per cent, provisional official figures released yesterday showed.
The economy "shrank in 2009 for the first time in six years," as its key export sector declined by 14.7 per cent and business investment plunged by 20 per cent, the Destatis national data service said in a statement.
Economic activity had expanded in 2008 by 1.3 per cent, and the central bank has estimated it should grow again by 1.6 per cent this year.
"The economic slump occurred essentially during the winter period of late 2008 and early 2009," Destatis president Roderich Egeler told a press conference. Business activity then "stabilised at a low level".
The government also posted a public deficit of €77.2 billion last year, around 3.2 per cent of output, after managing to balance its accounts in 2008, the data showed.
"The deterioration of public finances has been much more limited than in most other eurozone countries," ING senior economist Carsten Brzeski noted.
The European Union's Stability and Growth Pact holds EU members to public deficits of no more than three per cent of gross domestic product, and it was the first time in four years that Berlin exceeded the limit, Destatis said.
It is to release final growth figures on February 12.
This year, the finance ministry has estimated the deficit will exceed five per cent of GDP, as the government seeks to boost the economy with strong stimulus measures that include tax cuts.
Government spending jumped by 2.7 per cent in 2009, Destatis said, while household consumption gained a slight 0.4 per cent.
German authorities have approved a stimulus package worth up to €21 billion in 2010, including €18 billion in tax relief for private households that should underpin consumer spending.
The country's export-oriented economy took a hit from the global economic slowdown but is also set to benefit from fresh emerging market demand for capital goods such as machine tools and chemicals used to produce finished products.
Mr Brzeski commented on 2009's five per cent contraction by saying: "This was hopefully the last reminder of the severity of the recession."
The economy ministry was upbeat about the data, saying the worst had passed.
"It is particularly welcome that the labour market has remained surprisingly resistant," Economy Minister Rainer Bruederle said in a statement.
Unemployment has been limited by Germany's short-time work scheme under which the state subsidises shorter hours for workers to avoid widespread layoffs.
The number of jobless is nonetheless expected to reach more than 3.8 million people this year, after averaging 3.42 million, or 8.2 per cent of the workforce, in 2009.