German economy 'to grow by 1.8%'

The six economic institutes behind the prediction cite strong exports and higher consumer spending as the reasons for their optimism.

But they warn that the expansion in the economy - Europe's largest - will slow again in 2007.

It comes as the April jobless rate fell to 11.5%, but the labour agency said it did not mean a job market recovery.

In April, 4.79 million Germans were registered as jobless.

'Positive signals'

Officials at the Federal Labour Agency say annual growth of 2% is needed to create jobs.

The agency put the fall in April unemployment from 12% in March down to seasonal factors such as a delayed spring upturn in sectors such as construction and agriculture.

"Despite the positive signals on the job market, an increase in employment is not visible," agency head Frank-Juergen Weise said.

In recent months the German economy has shown signs of an upturn, with exports improving and domestic demand gradually picking up.

Earlier this week the Ifo survey of German business confidence showed the rise was the biggest in 15 years, coming after sharp increases in the four consecutive months.

And there are hopes that this summer's football World Cup, bringing thousands of visitors to the country, will also provide another economic boost.

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