Germany will slow practically to a halt next year as the euro zone debt crisis takes its toll on Europe's biggest economy, according to a leaked report from the country's top economic institutes.
Growth in Germany will be a mere 0.8% in 2012, the four leading think-tanks will say in their forecasts, due to be published tomorrow, but leaked a day in advance to the Frankfurter Allgemeine Zeitung daily.
This would represent a drastic downwards revision. In their previous outlook, published in April, the institutes had forecast growth next year of 2%.
For its part, the German government has predicted growth of 1.8% next year and will unveil its revised outlook next Thursday. However, for this year, growth is expected to be slighter higher due to a strong first half, the institutes will say, according to the newspaper which cited "well informed sources."
According to the revised forecast, the economy will expand 2.9% in 2011, slightly faster than the 2.8% seen in April. Berlin is also counting on a 2.9% growth rate, following a strong year in 2010 in which output expanded 3.6%.
Germany, Europe's powerhouse economy and the world's second biggest exporter after China, has so far weathered the crisis relatively well, with low unemployment and dynamic growth. However, clouds have gathered over the country and output slowed to 0.1% in the second quarter, as business and consumer confidence has slumped.
