(Adds economist comment, exporters' association, background)
By Paul Carrel
BERLIN, Nov 13 (Reuters) - German gross domestic product (GDP) contracted by 0.5 percent in the third quarter, data showed on Thursday, putting Europe's largest economy in recession for the first time in five years.
The bigger than expected quarter-on-quarter decline in GDP, adjusted for seasonal, calendar and price effects, was marked by a negative contribution from foreign trade as exports weakened, more than offsetting a rise in private and public consumption.
The figures underscored the risks for the broader European economy, which faces a deep and prolonged downturn, exacerbated by ongoing turbulence in the global financial system. Economists polled by Reuters had been expecting a more modest third-quarter contraction of 0.2 percent.
"This doesn't look good at all," said Commerzbank economist Ralph Solveen. "The fourth quarter will be very weak. We'll probably see even worse figures then. We should see things heading down in the first half of 2009 as well, with a stabilisation after that."
The economy last shrank for two straight quarters in the first half of 2003, the Office said. That contraction followed negative growth in the final quarter of 2002 -- making for the economy's weakest patch since reunification in 1990.
The weaker-than-expected GDP figure fuelled financial market gloom about Europe's economic outlook, helping euro zone government bonds edge higher.
Germany's fortunes are crucial to the performance of the overall euro zone. Figures on euro area GDP due on Friday are expected to show a third-quarter contraction of 0.2 percent, putting the 15-nation currency zone in 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 Germany is suffering.
To limit the damage, Chancellor Angela Merkel's government has unveiled a package of targeted stimulus measures they say could generate investments and contracts of up to 50 billion euros, but the weakness could increase pressure on Berlin to do more for average Germans.
"WE HAVE PROBLEMS"
In a sign of how Germany's big companies are suffering, carmaker Daimler said last month it would shut two big German plants for a month due to a sharp drop in demand.
Auto parts maker Robert Bosch GmbH said last week it would shorten the working week for 3,500 workers at a plant in Germany for six months.
"We have problems in the automotive sector -- there is no doubt -- because of the U.S. market," Anton Boerner, President of the BGA exporters' association, told Reuters Television.
On the year, German GDP increased by 1.3 percent in the third quarter after annual growth of 3.3 percent in the April-June period, the statistics office figures showed.
Second-quarter GDP was revised to show a contraction of 0.4 percent, compared with 0.5 percent previously reported.
The economy is headed for further weakness, indicators show.
German business expectations plunged in October to their lowest level since the country was unified in 1990, the Munich-based Ifo economic research institute's monthly business climate survey showed in October.
"If you think today's numbers are already bad, just wait for the next quarter," said ING Financial Markets' Carsten Brzeski. "The headwinds of the financial crisis and the global economic slowdown are blowing right in the face of the German economy."
"At the earliest, a recovery can be expected in the second half of 2009," he added.
The German statistics office is due to publish a breakdown of the third-quarter GDP figures on Nov. 25.
For a table on the GDP data, double click on (Reporting by Dave Graham, Noah Barkin and Kerstin Gehmlich; Editing by Victoria Main)