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By Paul Carrel
FRANKFURT, Jan 14 (Reuters) - German economic growth slipped to a three-year low in 2008, dragged down by a marked slowdown in exports which analysts expect to continue this year and push the country into its worst post-war recession.
Preliminary data from the Federal Statistics Office on Wednesday showed German gross domestic product (GDP) growth slowed to 1.3 percent last year, the weakest performance since 2005.
A global downturn has battered German manufacturers, sparking a record decline in exports in November and fuelling fears the economy could sink into a deep recession.
"There's no hope that we'll be positive (in terms of GDP) in 2009. It is likely to be worse. We're expecting a contraction of 2.5 percent," said Alexander Koch, an economist at Unicredit.
The mid-range forecast in a Reuters poll of 28 economists had been for 2008 real annual growth of 1.4 percent.
In 2007, Europe's biggest economy grew by 2.5 percent.
Since World War Two, the German economy has never contracted by more than one percent in a year, but some analysts believe there is a risk it could shrink by three percent or more this year.
To counter this risk, Chancellor Angela Merkel's government has assembled two economic stimulus packages worth roughly 81 billion euros ($108 billion) over two years.
The Statistics Office estimated the economy had contracted by between 1.5 and 2.0 percent quarter-on-quarter in the final three months of 2008, which would be the biggest quarterly contraction since German reunification in 1990.
EXPORTS WEAKEN
The Office added that there was a statistical drag going into this year of around 1.5 percent. This implies that even if growth were flat during each quarter of 2009, the economy would still contract by that amount over the full year. "This is a very, very bad starting position for this year," said Holger Schmieding, an analyst at Bank of America. He had forecast a 2.5 percent economic contraction in 2009.
"That's now in the optimistic range. A minus of 3 percent is now also realistic, despite the new stimulus programme," he said. "The package is structured in such a way that it is only set to take effect from the second half of this year."
German engineering orders probably dropped by a record margin in the final quarter of 2008, the VDMA industry association said on Wednesday. It reported a 30 percent year-on-year fall in new orders in November.
Big German firms have been cutting output due to weak demand and industrial group Siemens said on Tuesday it expected a "subdued outlook for 2009 and especially for 2010",
German exports rose 3.9 percent last year, with imports up 5.2 percent. This meant net trade subtracted 0.3 percent from GDP. The last time net trade had a negative impact was in 2003. In 2007 exports rose 7.5 percent, and imports by 5.0 percent.
Adjusted for working days, German 2008 growth was 1.0 percent, Office officials told a news conference in Frankfurt.
Germany's public sector finances showed an overall deficit of 0.1 percent of GDP last year, the Office said. (Writing by Dave Graham, editing by David Stamp)