German economy shrank in fourth quarter

Last year's economic performance is the weakest since the depths of the financial crisis in 2009, and well below Germany's 10-year average annual growth rate of just over 1%. Exports grew by 4% in 2012, about half the rate of 2011, and investment in industrial machinery declined by more than 4% after growing for the previous two years. Related: ECB holds rates as signs of stability emerge Still, a notable recovery is unlikely until the second half of 2013. Germany's central bank is predicting annual growth of just 0.4% this year, and the German government is due to publish its own revised forecast Wednesday. Business newspaper Handelsblatt and other media reported Tuesday that the forecast for GDP growth this year would be cut to 0.5%, from 1% in November. The economics ministry declined to comment. Despite the slowdown in growth in 2012, Germany managed a budget surplus of 0.1% of GDP, reversing a deficit of 0.8% in 2011. This is only the third time in 22 years Germany has recorded a surplus.

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