Berlin - The German economy is set to show modest growth this year and next, shrugging off the effects of the global financial crisis, the Organization for Economic Cooperation and Development said Wednesday.

Germany had enjoyed a strong cyclical rebound after a long period of stagnation, the OECD said, adding that solid foundations had been laid for sustaining the upswing or at least mitigating the effects of financial market turmoil.

It called, nevertheless, for further reforms to raise output, noting that a "good start in this regard has been made with the labour market reforms of recent years."

The OECD put growth this year at 1.8 per cent, adjusted for working days, with 1.6 per cent in 2009. Economic growth last year came in at 2.9 per cent.

The OECD based its forecast on the assumption that inflation would not continue to rise. German annual consumer inflation came in at the comparatively high level of 3.1 per cent in March.

The OECD predicted that a decline in the strong performance of exports over recent years could be matched by a rise in domestic demand.(dpa)