Presenting their report on the German economy in Berlin on Thursday, OECD officials stuck to a cautious economic growth forecast of 1.1 percent for 2004, but added that strong exports might boost growth a little.

Growth of 2.1 percent would then follow in 2005, according to the report. This also means that unemployment figures are unlikely to change in the near future.

"There won't be a quick turnaround of the labor market," the report reads, adding that additional jobs won't exist until 2005.

German officials on Wednesday had presented unemployment figures for July -- the highest for that month since reunification in 1990. According to the Federal Labor Office, 4.36 million people were not working.

While applauding the government's labor reforms, the OECD report also said that changes were not going far enough. The Labor Office has to do a better job at finding work for the unemployed, who in turn should be required to search for jobs themselves no matter how old they are.

OECD officials also believe Germany will continue to violate the European Union's stability and growth pact in 2005.

The pact requires all members of the euro zone to keep budget deficits below 3 percent of gross domestic product. According to the report, Germany's deficit will hover around 3.7 percent this year and 3.1 percent in 2005.

The German government will have to make "substantial" changes to achieve its target of 1.5 percent by 2007, according to the report.