The German central bank says it expects Europe's biggest economy to contract by 6.2% this year.
'The German economy is currently in a sharp recession,' the Bundesbank wrote in its monthly report for June. The bank said that while pressure on economic activity was likely to ease during the rest of 2009, it did not see a significant upturn in the near future.
'Economic activity is expected to remain at a subdued level in 2010,' the report said. The estimates are in line with that of the German government, which has forecast an economic recession of around 6% this year, the worst contraction since World War II.
A big factor now weighing on the economy is unemployment, and the central bank warned that 'more job cuts and a faster rise in unemployment may be expected in the coming quarters'. It forecast that unemployment would reach 10.5% next year, compared with the level in May of 8.2%.
Inflation was expected to dip into negative territory in the coming months, though the medium-term trend was likely to remain positive.
