A German panel of top economic experts today downgraded their growth forecast for the current year, but said recent intervention by the European Central Bank was helping alleviate the situation.
The so-called "Five Wise Men", who advise the government on economic matters, said in a statement they expect Europe's biggest economy to expand by just 0.8% this year after 3% in 2011.
That represented a fractional downward revision from their last forecast released in October, when the experts had been pencilling in gross domestic product (GDP) growth in 2012 of 0.9%.
"There are still substantial risks for the German economy, even if ECB intervention has help calm the situation somewhat," they said in a report.
"There are increasing signs that the feared economic downturn can be averted. But the tensions in the banking sectors of many euro zone countries remain so great that they threaten to hamper the supply of credit to the private sector," the report said.
German GDP growth would therefore slow more noticeably to just 0.8%, largely as a result of domestic activity, it said.