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IMF cuts Germany growth forecast in half

The International Monetary Fund (IMF) has slashed its annual growth forecast for Germany this year in half, as uncertainty in the eurozone continues.

It now estimates the economy will grow by 0.3 per cent this year, which is down from its April prediction of 0.6 per cent.

Also downgraded was its growth forecast for 2014, which now stands at 1.3 per cent - down from 1.5 per cent.

The German government has predicted the economy will grow by 0.5 per cent in 2013 and although the IMF said growth is expected to be weak, the economy will likely recover in the second half of the year.

"Should the alleviation of uncertainty and an expected gradual recovery in the rest of the euro area fail to materialise, growth can be expected to remain below its potential for longer," the IMF report stated.

Germany managed growth of just 0.1 per cent at the beginning of the year, blaming an unusually prolonged winter.

By Asim Shah