Wednesday, the German government said the economy will grow 0.5% in 2010, benefiting from stimulus measures and recovery of exports.

However, the economy will shrink 6% this year, the worst contraction since the World War II and sharper than a 2.25% fall predicted in January, the Federal Ministry of Economics and Technology said in a statement.

Economy Minister Karl-Theodor zu Guttenberg said the expected economic decline this year is mainly due to a massive global slump and the associated sharp fall in the country's exports.

He noted that the stabilization of the banking and financial sector remains the biggest challenge for authorities in taking the economy back on a sustainable growth path.

Moreover, the government sees the number of unemployed to increase to 3.7 million this year and to 4.6 million in 2010.

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