The International Monetary Fund (IMF) has today cut its forecasts for 2010 for Europe’s largest economy.
The IMF said it now expects Germany to expand by 1.2% this year, lower than its previous estimate of 1.5%.
Furthermore, it has cut its 2011 forecast of 1.9% growth to 1.7%.
Washington-based IMF attributed the downgrade to weakness in the German banking industry, and the chance of lower than expected levels of global trade.
The IMF report said the German economy faced “substantial downward risks” in 2010, and that “economic recovery is likely to be moderate and fragile”.
The report comes just a week after the Organisation for Economic Co-operation and Development forecast that the German economy would grow by just 1.1% this year.
However, the German Government and the central bank are slightly more optimistic, expecting the economy to expand by 1.4% and 1.6% this year respectively.
Germany was one of the first major economies to exit recession after experiencing positive growth in the second quarter of last year.
This was primarily due to the €81 billion (£72 billion) stimulus package introduced by German Chancellor Angela Merkel last year.
However, the economy failed to grow in the fourth quarter of 2009.