UPDATE 3-German economy could shrink 1% in 2009-Steinbrueck

(Recasts with Steinbrueck on 2009 outlook, OECD)

By Paul Carrel

BERLIN, Nov 25 (Reuters) - The German economy could contract by as much as one percent next year, Finance Minister Peer Steinbrueck said on Tuesday after official figures showed fading exports led the country into recession in the third quarter.

A one percent contraction would mark Germany's weakest annual economic performance since the Federal Republic was founded in 1949 out of the rubble of World War Two, and would underline the extent to which the country is suffering from weakness in its export markets.

"The information I have available amounts to a corridor from around 0.2 percent (growth) to minus 1.0 percent," Steinbrueck told the Bundestag lower house of parliament during a budget debate.

The government slashed its official forecast for 2009 growth to 0.2 percent in mid-October.

But the Economy Ministry said on Monday the International Monetary Fund was expecting the German economy to contract 0.8 percent in 2009. The economy's weakest year so far since 1949 came in 1975, when it shrank 0.9 percent.

Earlier on Tuesday, the Federal Statistics Office said German gross domestic product (GDP) contracted 0.5 percent quarter-on-quarter in the July-September period of this year, in line with a preliminary estimate published earlier in November.

A weaker contribution from foreign trade more than offset a slight rise in private consumption, the data showed.

Falls in inflation and unemployment have buoyed household spending in Germany in recent months but economists say private consumption could soon ease as exporters start laying off workers due to weaker foreign demand.

"In the long run consumers will not be able to offset the declining exports and investment even with a sinking oil price, particularly as unemployment will rise again in 2009," said UniCredit economist Andreas Rees.

In its twice-yearly Economic Outlook released on Tuesday, the Organisation for Economic Cooperation and Development (OECD) said German unemployment would rise significantly.

"LONG RECESSION"

Germany has been the world's largest exporter of goods since 2003, profiting from a period of strong global growth. But as boom turns to bust in many export markets, its large exposure to the global economy means it is suffering.

Net trade shaved 1.7 percentage points from the third quarter GDP result, the Office said. Exports fell 0.4 percent on the quarter, and imports rose 3.8 percent.