The German economy contracted by a record amount in the final three months of last year.
Gross domestic product shrank by 2.1% compared to the previous year. The amount was more than expected. The Federal Statistics Office said it was the worst quarterly performance since reunification in 1990.
The contraction was led by a decline in investment and net trade, as global economic conditions worsened.
The October-December period was the third quarter in a row in which the economy shrank. Further contraction is expected in the first quarter of 2009.
Year-on-year, the economy shrank by 1.6% after growing by 1.4% in the period, July-September.
Industry orders and output posted their biggest annual falls in December since reunification as demand for manufactured goods crumbled. Engineering orders fell at their sharpest pace in 50 years in the fourth quarter.
Exports fell by a record amount in November and fell further in December.
In Brussels, official data showed the 16-nation eurozone shrank by a record 1.5% in the same period compared to the third quarter. The 27-nation European Union is also in recession.
France is the only major European economy not formally in recession, defined as two consecutive quarters of contraction.