Berlin  - The strong euro, record high energy prices and financial market turbulence have resulted in Germany's key economic institutes revising down their growth outlook for Europe's biggest economy, media reports said Wednesday.

Instead of 2.2 per cent, the institutes are to forecast in their twice yearly report to be released Thursday that German economic growth will come in at 1.8 per cent in 2008 before slowing to 1.4 per cent in 2009, the nation's business daily Handelsblatt reported.

But while the institutes will say they expect "a clear slowing of the economic expansion" and higher inflation, they are also expected to add that the nation's economy remains in robust shape.

Moreover, the institutes believe that the global credit crunch triggered by the US subprime mortgage market crisis has so far had only a limited impact on Germany and in particular corporate financing in the nation, the daily Sueddeutsche Zeitung reported.

The German economy grew by 2.5 per cent last year after it emerged from a protracted period of stagnation in 2006 to report a 2.9 per cent expansion rate.

Corporate Germany and the nation's industrial sector have also remained positive about the country's economic outlook with the key electronics industry predicting Wednesday its fifth growth year in a row.

However, while German economic growth is forecast to slip back a gear in the coming months, the nation can expect further improvements in its labour market with the numbers out of work falling below 3 million this year.

Data released in the runup to the publication of the institute's report Thursday, showed inflation creeping up in both Germany and across Europe on the back of higher food and energy prices.

While Germany's statistics office said that European Union harmonized inflation in Germany jumped to an annual 3.2 per cent in March from 2.9 per cent in February, the EU statistics office revised up the March inflation rate in the 15-member eurozone to 3.6 per cent.

This is well above the European Central Bank's 2-per-cent annual inflation target.

With the ECB talking tough on interest rates in the face of resurgent inflationary pressures, the euro climbed by about 1 per cent to a record high just short of 1.60 dollars following the release of the consumer price data.

At the same time, the institutes are expected to say in their report German consumer prices will come in at 2.6 per cent, up from the 2.0 per cent they forecast about 6 months ago.

However, like many analysts, the institutes are predicting inflationary pressures to ease as the year unfolds with consumer prices in Germany slowing to 1.8 per cent in
2009.

The institutes presenting the report Thursday include the Kieler Institut fuer Weltwirtschaft (IfW), the Rheinisch-Westfaelisches Institut fuer Wirtschaftsforschung (RWI), the Institut fuer Wirtschaftsforschung Halle (IWH) and the Institut fuer Wirtschaftsforschung (IFO). (dpa)