The German economy shrank 0.4% in the final quarter of 1998, according to official statistics, but analysts backed a government forecast for a modest upturn this year. The Federal Statistics Office blamed weakening exports for the quarter-on-quarter decline and said domestic demand was the economy's sole driving force at the end of last year. The office also said year-on-year growth slowed to 2.5% in the fourth quarter from 2.8% in the third. It confirmed the full-year 1998 growth rate at 2.8%. Economists said the data did not change their view that the European Central Bank will keep interest rates unchanged.