The German economy is on the brink of recession and will expand by only 0.2% in 2009 according to leading economic think tanks there.
A report by four institutes - Ifo in Munich, IfW in Kiel, RWI in Essen and IWH in Halle - said the export sector could be hit just as hard as the financial sector.
In a twice-yearly report, they added the economy could begin to recover from mid-2009 if the banking sector stabilises.
The report stuck to its original forecast of 1.8% growth for 2008, down from 2.5% in 2007.
However, it predicted growth of just 0.2% in 2009 and added that, in a worst-case scenario, the economy could shrink by 0.8%.
A separate survey indicates investor confidence has also deteriorated.
The confidence index, compiled by the ZEW research institute, stood at minus 63 points down from minus 41 points in September.
Germany is expected to cut its official growth forecasts on Thursday.
