Germany will nearly halve its growth forecast for next year when it releases updated projections on Thursday, sources told AFP, as the eurozone debt crisis takes its toll on Europe's top economy.
The government will slash its forecast to 1.0 percent for 2012, compared to the 1.8 percent it had projected in April, the government sources said.
The revised forecast, if confirmed, would bring Berlin more into line with its leading economic institutes, which last week also cut their view of output growth to 0.8 percent.
This year, growth is expected to be 2.9 percent, the sources said, already a slowdown from the healthy 3.7-percent output in 2010.
While Germany has generally weathered the economic storm better than its rivals in the eurozone, forward-looking indicators in recent weeks have not given grounds for optimism.
The closely watched Ifo index of business confidence has fallen to its lowest level in more than a year and the ZEW think-tank said on Tuesday that investor confidence in Germany had plunged to a three-year low.
Moreover, industry, one of the main motors of the German economy, appears to be spluttering, with shops reporting slowing trade and industrial orders down.
Exports, Germany's driving force, have until now been resilient but economists warn that even the world's second largest exporter after China will not be immune for long to a eurozone debt crisis that is hurting world demand.