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German economy shrank despite rally

The German economy, the biggest in the euro zone, grew by 0.2% in the fourth quarter of last year compared with the previous three months.

German gross domestic product (GDP) had already expanded by 0.2% in the third quarter of 2003.

But despite the modest growth in the last two quarters of the year, German GDP contracted slightly by 0.1% in the whole of 2003.

Germany's statistics office said that the slight pick-up in economic activity was mainly attributable to 'a relatively strong rise in domestic demand'. By contrast, the net external contribution declined, since imports grew faster than exports, leading to a lower trade surplus.