The German economy declined 0.25% from the growth in the first 3 quarters in 2011 in Q4 2011. Economists predict another contraction in Q1 2012. That meets the formal definition of recession. The outlook in 2012 depends upon events in the eurozone. The forecast is for 0.4% growth in 2012.
Investors are not worried about the risk of investing in government debt. The yield on 5 year bonds was under 1% for the first time in history. The German deficit is only 1% of GDP. This contrasts sharply with other countries in the eurozone.
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