The German economy - Europe's biggest - is set to slump by 6% this year in one of the worst recessions in the developed world, the economy ministry said today, slashing its previous forecast.

In its new projections, the government said that growth was set to creep back into the black next year, however, with output likely to rise by 0.5% in 2010.

The latest estimates are a sharp downward revision from the government's projections published last year, which predicted a contraction of 2.25%.

If the 6% slump is confirmed, only Japan among major economies would suffer a worse recession, with a predicted 6.2% decline this year according to the latest projections from the International Monetary Fund.

'The economic decline that we are expecting this year is predominantly the consequence of the massive global slump and the related massive decline in our exports,' Economy Minister Karl-Theodor zu Guttenberg said.

Germany - the world's top exporter - has seen demand for its goods dry up as customers around the globe suffer from the financial crisis. Recent data showed exports plunged by 23.1% in February.