The German economy continued on a fairly flat growth path during the July to September quarter and analysts have predicted that growth will remain slow in the year ahead.

But recession fears were played down by economists, even though investment by German companies is still falling.

I don't think we'll see a recession, more a stabilisation at low levels

Rainer Guntermann, DKB

Strong spending by consumers helped the German economy expand by 0.3% during the quarter, up from 0.2% during the previous three month period, according to Federal Statistics Office data.

"On the whole the data show that growth had not accelerated," said Dresdner Kleinwort Wasserstein economist Rainer Guntermann.

Weakness ahead

Germany's economy narrowly avoided falling into a recession during the last half of 2001, but the recovery has been slow ever since.

This year, growth is set to reach 0.5%, Mr Guntermann predicted, adding that it "won't be much better in 2003".

"But I don't think we'll see a recession, more a stabilisation at low levels."

Mr Guntermann's predictions beat one by the Organisation for Economic Co-operation and Development (OECD) which cut its forecast for growth this year from 0.7% to 0.4% and its forecast for growth next year from 2.5% to 2.5%.

Germany's economic outlook depends heavily on what happens in the US economy and other countries to which it exports its goods and services, as well as on the relative strength of the euro.

"If the single currency rises strongly, that won't be good news for exports," said Mr Guntermann.

Imports grew by 2.8% during the July to September quarter while exports rose 2.7%.