Germany may see economy shrink in fourth quarter

Europe’s largest economy will grow in the third quarter, but may experience a “slight contraction” in the last three months, the Bundesbank said.

Germany has so far continued to grow while many of its neighbours shrink.

Meanwhile, Greece’s deficit last year was higher than previously expected.

Greece’s deficit was 9.4% of output in 2011, the Hellenic Statistical Authority said. In April, it estimated that the public deficit stood at 9.1%.

That compares to -10.7% in 2010 and -15.6% in 2009.

Greece’s debt stood at 170.6% of GDP, a large jump from 148.3% in 2010.

In Germany, the Bundesbank said: “There are increasing signs that, following a noticeable expansion in output in the third quarter, we might see stagnation or even a slight contraction in gross domestic product (GDP) in the fourth quarter.”

Germany grew 0.5% in the first quarter and 0.3% in the second quarter.

Europe’s largest economy is the main backer of the two eurozone rescue funds, which have been used to bail out Greece, Ireland, Portugal and, soon, Spain’s banks.

Greece is already predicting its economy will shrink by much more than previously estimated this year and said that its economy will shrink for a sixth year in 2013.

 

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