Berlin: With GDP slumping 0.5 per cent during the third quarter, Germany, is now officially in recession. Q3 data released Thursday pushed Europe's largest economy into recession for the first time in five years. The last time Germany experienced a recession was in the second half of 2003.

The technical definition of a recession is two consecutive quarters of negative growth.

The latest Q3 figures follow revised Q2 figures, which show a 0.4 per cent fall in growth. A slump in exports, with the euro strengthening and overseas demand for goods weakening, only worsened matters.

In a period of strong global growth from 2003, Germany remained the world's largest exporter of goods. With economies struggling, and demand beginning to slump, Germany's large exposure to the global economy is now beginning to hurt.

Economists project that current weakness will continue into the fourth quarter, as well as the first half of 2009.

In the year to September, German GDP was up 1.3 per cent, compared to annual growth of 3.3 per cent in the previous period.

In a larger context, the quarter-on-quarter GDP decline also does not bode well for the broader European economy, which now faces the prospect of a sustained downturn. Matters have also been made worse by continuing turmoil in the global financial system.

German GDP figures will also impact the overall euro zone. GDP figures for the euro area, which are  due on Friday, are now expected to reveal a third-quarter contraction. If this should so transpire, then the 15-nation currency zone will also step into recession.

Ireland was the first European country to step into recession, and is now followed by Germany. In all likelihood the two countries will be joined by the UK, after the Bank of England's Inflation Report revealed that GDP is set to fall by 2 per cent next year.