German Economy Shrinks in 2003

Germany’s economy last year experienced its first full-year recession since 1993, the Federal Statistics Office said on Thursday. Europe’s largest economy contracted 0.1 percent in 2003, faring worse than the stagnation most economists had predicted. Berlin’s budget deficit hit 4 percent of gross domestic product last year, up from 3.5 percent in 2002 and far above the EU’s 3 percent limit. “Overall the economic development was disappointing in Germany in 2003, like in the two previous years. There were signs of a weak recovery in the second half of the year but one can't yet speak of a sustained revival,” Statistics Office President Johann Hahlen told a press conference. German growth has stagnated in recent years, weighed down by a bloated welfare system, a rigid labor market and chronically high unemployment.