Germany's gross domestic product (GDP) will shrink by 5 percent this year, slightly better than the 6 percent contraction forecast in April. In 2010, the group now says the economy will actually grow 1.2 percent. It had predicted a 0.5 percent contraction.

"In the autumn of 2009, the lowest point of the worst global recession since World War II appears to be behind us. Much points to an economic recovery," the institutes said Thursday in a press statement.

The group did warn, however, that predictions were not promises and that there are still "substantial risks" to the economy.

"The present recovery will likely not be sustainable. There are many more significant headwinds standing in the way of a swift upturn," the report said.

The group is composed of five German, two Austrian and one Swiss institute and issues economic closely watched joint reports twice a year.

hf/AFP/AP/dpa
Editor: Trinity Hartman