Special Report: Global Financial Crisis

    BERLIN, April 23 (Xinhua) -- German economy will shrink by 6 percent this year and 0.5 percent next year, facing the worst recession since World War II, a report of a group of top economic institutes said on Thursday.

    As a result of the economic downturn, the German unemployment will increase 1 million this year to exceed 4 million, and continue to rise to 4.7 million, or 10.8 percent, in 2010, the report said.

    The budget deficit of German government will jump to 3.7 percent of the gross domestic product this year and to 5.5 percent in 2010, fueled by government stimulus package and falling tax revenue, the report said.

    "On the basis of leading indicators, the institutes expect that the downward trend will continue and we do not believe there will be a stabilization before the middle of 2010," the report said.

    "The economy is being dragged down by a global and extraordinary dramatic downturn," said Economy Minister Karl-Theodor zu Guttenberg. "The figures presented by the institutes present an extremely clear picture."

    German government will release its own prediction of the economy on April 29, which is certain to be lower than its previous projection of minus 2.25 percent for 2009, local media said.

    German Finance Minister Peer Steinbrueck said Wednesday that the economy was set to shrink by at least 5 percent this year.

    The institutes include Ifo institute in Munich, IfW in Kiel, RWI in Essen and IWH in Halle.