The German economy is on track for growth this year of around 1 per cent, despite a slump in the manufacturing sector, Bundesbank vice-president Jürgen Stark said yesterday.

Asked whether he expects the German economy to regain some strength later this year after new data showed manufacturing contracted in April, Mr Stark said: "You know what our internal assessment is at the bank. It is about 1 per cent [ GDP growth]." He said "Yes" when asked if he remained comfortable that Germany could achieve that growth rate, even after the purchasing managers index slipped below the 50 mark that divides expansion from contraction to hit 49.7 in April.

Mr Stark said the Bundesbank maintains a medium-term perspective and, therefore, does not concern itself with monthly changes.

"These are monthly figures. Monthly figures, they go up and they go down," he said.

The Ifo business sentiment index in April also fell for the third month in a row. The two surveys combined have some analysts worried that Germany may slip into a mini recession.

The economy contracted in the latter half of last year. It is expected to rebound in the January-March period, with GDP expanding around 0.5 per cent, partly due to adjustments for the number of days worked. But that could prove the high point for 2005.

However, strong industrial orders for March released on Friday raised hopes that the economy may be in better shape than thought.