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[Geomean]

Reuters Link

"Germany showed first signs of feeling the pain from the euro zone's debt crisis as the economy shrank in the last three month of 2011, despite outperforming its peers for main part of the year thanks to strong domestic demand and exports.Gross domestic product (GDP) grew 3.0 percent in 2011, preliminary Federal Statistics Office data showed on Wednesday, below the previous year's growth rate of 3.7 percent -- the fastest since reunification -- and in line with a Reuters poll estimate.

But GDP contracted by around 0.25 percent in the fourth quarter of 2011, an official from the Statistics Office added.

"Germany cannot isolate itself so easily from tensions within the euro zone. In addition the export sector is facing a difficult period given the fall in global demand," said Joerg Zeuner, chief economist at VP Bank.

"Another quarter of contraction and thereby a technical recession are distinctly possible. However if there is no further escalation in the euro zone debt crisis the German economy should still grow in 2012, albeit at a moderate 0.5 percent," he added.

Germany's export-driven economy recovered quickly from the 2008/09 financial crisis, but began to feel the pinch late last year as the debt crisis spread from Greece to its key trading partners in the euro zone and weighed on the real economy.