The German economy will grow by a moderate 1.5 per cent this year with a slow recovery from recession underpinned by a pickup in demand from the world's leading emerging economic powers, a key report released Thursday said, dpa reprted. A group of leading economic research institutes told the German government that they have has revised upward their 2010 growth forecast for Europe's biggest economy from the 1.2 per cent they estimated last October. "After the deep slump caused by the financial crisis, the economy's basic trend is pointing upward," the institutes said in their twice-yearly report. Growth will come in at 1.4 per cent in 2011 as the country leaves behind what has been its biggest recession in a generation, the institutes predicted. But the report says that it will take until 2013 before the German economy returns to its 2008 growth level. The economy contracted by a dramatic 5 per cent last year. Many economists, however, believe that the German growth rate could top 2 per cent this year as a pickup in world trade fuels Germany's key export machine. In their report, the institutes predicted that German exports would grow 7.1 per cent in 2010 and 6.3 per cent in 2011 on the back of demand from leading emerging economies such as China, India and Brazil. "The recovery continues to be driven by exports, which posted a surprisingly strong slump in the recession," the institutes said. "They're benefiting from a lively expansion especially in emerging economies." But the institutes also warned about the risk of a further deterioration in the country's state finances and criticized Chancellor Angela Merkel's government for not spelling out a clear course of action for winding back public spending boosted during the economic downturn. -- SPA
