The German economy, the largest in Europe, will renew its growth in 2013 thanks to domestic demand, Germany's leading research institutes said on Thursday."An upwards tendency reemerged in the German economy in spring 2013," the institutes said in their joint spring economic forecast.They expected German GDP to grow by 0.8 percent in 2013 and the number of unemployed to continue to fall to 2.9 million. The inflation rate was expected to drop to 1.7 percent this year.The joint report is released twice a year by Munich-based Ifo Institute, Kiel Institute for the World Economy, Halle Institute for Economic Research and the RWI Institute in Essen.In the new year, "conditions are ripe for a sharp increase in economic output," the report said, referring to low interest rates, a robust labour market and stable income expectation "which should support consumer spending.""Domestic demand will account for all of the increase in gross domestic product," it added.Weak external demands dragged German economy, which relied on exports, to a slow growth rate of 0.7 percent in 2012. The situation was expected to improve this year, with the world economy picking up and the economy in the eurozone reviving slowly.However, the report warned that, though not as great as last year, a risk that the crisis in the eurozone would intensify remained, should there be a failure in the structural adjustment processes in crisis-hit states.In 2014, German economy is expected to pick up with a growth rate of 1.9 percent. Exports are expected to increase at a faster pace, given the forecast improvement in the economies of Germany's trade partners.Domestic economy would remain one of the growth engines, thanks to low interest rate, a rise in disposable income, decrease of unemployed people to 2.7 million and a moderate inflation rate of 2 percent.The government budget is expected to be balanced this year and see a surplus of 0.5 percent to GDP in 2014, mainly thanks to more favourable economic conditions.