Economy Minister Michael Glos announced at a press conference in Berlin that the government still expected gross domestic product (GDP) to grow by 1.7 percent this year, however, the outlook for next year was grim.
“We already see the economy's first skid marks,” Glos said. “There's nothing to sugarcoat or keep quiet.”
Before the crisis currently rocking world financial markets Berlin had been expecting growth of 1.7 percent next year. The German economy grew by 2.5 percent in 2007.
The revised growth forecast brings the government's expectations in line with the country's leading economic institutes, which on Tuesday warned Germany was teetering “on the brink of recession” in their annual autumn outlook.
The institutes cited the global financial crisis, collapsing real estate bubble and inflationary pressures as the biggest dangers to the German economy – which is heavily dependent on exports.
“The risk that aforementioned conditions could worsen has increased in recent weeks,” the institutes wrote in their highly anticipated economic report.