RTTNews - Friday, the Bundesbank said it expects the German gross domestic product to contract 6.2% in 2009 and forecasts economic activity to remain subdued in 2010. The latest outlook for 2009 shows a sharp downward revision from a 0.8% contraction predicted in December last year.

The German central bank said downward pressure on the economy is likely to ease during the course of 2009, although it does not look like there will be a significant upturn in the near future. The bank said the biggest Eurozone economy could gain some ground in the third quarter of 2009 as monetary and fiscal stimuli ease tensions in the international financial markets.

Further, the bank said unemployment is likely to increase by more than 1 million to 4.4 million on an annual average in 2010. This corresponds to an unemployment rate of 10.5%, up from 8.4% this year.

Moreover, Buba said consumer price annual inflation will temporarily enter negative territory over the next few months. Inflation in 2009 is forecast to be at 0.1% and then it is expected to rise to 0.5%.

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