The German economy is likely to grow by some 0.8 per cent this year but probably contract in the second quarter, the Ifo economic research institute said today.
The forecast for Europe's largest economy was slightly higher than the 0.7 per cent growth jointly predicted by Munich-based Ifo and the country's other leading five think tanks in April.
However it was lower than the 1.2 per cent expansion Ifo had forecast in late December. "After a fairly good start to the year, the German economy has once again faltered in the spring. Total economic output probably fell slightly in seasonally adjusted terms in the second quarter," Ifo said in a statement.
The German economy surprised analysts by expanding by 1.0 per cent in the first three months of 2005, driven by a strong export performance.
This was the strongest quarterly growth in four years. Since then, economic data has pointed to a slowdown. Ifo, whose closely watched business climate index is released every month, forecast the economy would grow by 1.2 per cent next year as consumer spending and exports strengthened.
Export growth, which has almost single-handedly fuelled German economic expansion in recent years, was seen accelerating from a forecast 4.6 per cent in 2005 to 6.5 per cent next year. Ifo forecast consumer spending would rise by 0.2 per cent this year and 0.7 per cent in 2006 as employment increased.