The German economy entered recession in the third quarter according to the statistics office Destatis today. Gross domestic product (GDP) fell by 0.5% in the third quarter. In the first quarter of 2008, the economic performance was up 1.4%, while it was down by 0.4% in the second quarter. Two straight quarter of economic contraction, meets the accepted definition of a recession. The economy last contracted over two consecutive quarters in 1996.

The price-adjusted GDP climbed 1.3% and the calendar-adjusted GDP 0.8% in the third quarter of 2008 compared with the same quarter a year earlier. This rather significant difference was due to the fact that the reference quarter had one more working day compared to the third quarter of 2007.

Germany accounts for about 30% of Eurozone output.
 
The quarter-on-quarter comparison of price, seasonally and calendar adjusted data revealed positive contributions to growth in the third quarter of 2008, mainly due to a slight increase in the final consumption expenditure of households and government and to increasing inventories. As imports recorded a considerable increase and exports saw a decline, the balance of exports and imports had a negative impact on the development of the gross domestic product.

The economic performance in the third quarter of 2008 was achieved by 40.5 million persons in employment, which was an increase of 582,000 persons or 1.5% on a year earlier.

In addition to the first calculation of data for the third quarter of 2008, the results of the gross domestic product published so far for the first two quarters of 2008 were revised by up to +0.2 percentage points.

``It's looking grim and will continue to look grim for quite some time,'' said Stefan Bielmeier, an economist at Deutsche Bank last week who forecast Germany's economy will contract 1.5% next year. ``Germany's fortunes are tied to export markets and they are all collapsing. The German consumer won't be able to outspend the decline in exports.''