BERLIN (AP) -- Germany's economy shrank by 3.8 percent in the first quarter, the sharpest decline since record-keeping began in 1970, as demand for the country's exports dried up amid the global economic crisis, government data showed Friday.
The steep drop in January-March over the previous three months was the fourth consecutive quarterly contraction to gross domestic product.
Europe's biggest economy shrank 0.5 percent in the second and third quarters of 2008, putting it into a technical recession, and a revised rate of 2.2 percent in the fourth.
The Federal Statistical Office in Wiesbaden said in a statement that falling exports -- the engine of the German economy -- helped accelerate the contraction.
"The decrease of price-adjusted exports was markedly larger than that of imports," the statement said. Lower capital investment, the office said, exacerbated the decline.
The drop was more than the 3 percent predicted by economists, but some saw cause for optimism in signs of healthy private spending and a strong rise in foreign orders in March. Alexander Koch, an economist at UniCredit in Munich, predicted that the first quarter would be the low point of Germany's economic slump.
"Business sentiment in Germany and almost all other major economies have found its floor recently and showed encouragingly strong rebounds from their depressed levels," Koch wrote in a research note. He predicted the economy would contract a more modest 0.5 percent in the second quarter.
The government has forecast that Germany's economy will shrink a huge 6 percent this year, followed by a feeble 0.5 percent return to growth in 2010.
Germany's economy grew 1.3 percent in 2008, about half as much as the previous year.
The Finance Ministry said Thursday that falling growth is expected to sap more than euro300 billion ($409 billion) from previously estimated tax revenue through 2012.
This year alone, the ministry announced, income will be euro45 billion short of an estimate made last November.