Berlin - The German economy slumped by 0.5 per cent during the second quarter, data released Thursday showed, as concerns set in about the outlook for Europe's biggest economy.

It was the first contraction in the nation's economy in almost four years.

However, the slump was less than expected, with economists having forecast that the German economy would shrink by 0.8 per cent in the second quarter.

Releasing the data, Germany's statistics office also revised down the first-quarter growth rate from a previously estimated 1.5 per cent to 1.3 per cent.

While recent monthly data have shown key German exports and production managing to hold up in the face of the global economic slowdown triggered by the credit crunch, other statistics have painted a less-encouraging picture of the prospects for the nation's economy.

Once seen by many economists as helping Germany to offset fading world growth, private consumption in the country has taken a hit as energy prices have pushed inflation to record levels and economic worries have set in.

German consumer confidence has slipped to a five-year low, a key survey released last month showed and retail sales fell sharply in June.

At the same time, official data showed factory orders falling with the decline in unemployment slowing and a key survey showing business confidence in the country dropping to a three-year low. (dpa)