Think tank: German economy to shrink by 4.9% this year

BERLIN, April 15 (Xinhua) -- The German economy will shrink by as much as 4.9 percent this year, the DIW, a Berlin-based economic think tank forecast on Wednesday.

Since World War II, the German economy, the biggest in Europe, has never contracted by more than one percent in a calendar year.

The think tank said in a press release that the biggest economy of Europe, which is experiencing the biggest recession since World War II, will see a slow recovery till 2010.

"Slight recovery in the economy in 2010 is a realistic scenario," Klaus Zimmermann, the institute's president, said in a note released with the forecast.

The DIW said the German economy would suffer severely from the global downturn, forecasting exports would decline by 12.9 percent in 2009, and the investment in equipment and machinery would fall by 14.9 percent.

The think tank also forecast that the German government would post a budget deficit around 3.3 percent of gross domestic product(GDP) this year, overpassing the limit of 3 percent set out by European Union rules.

Earlier in January, the DIW had predicted the German economy would shrink by 1.1 percent this year. However, the think tank said on Wednesday that conditions were so uncertain that it did not want to make a forecast for 2010 yet.