The German economy is experiencing the onset of an economic upswing which should gather pace next year, economic research and a poll of mid-cap companies and retailers have shown.

The RWI economic research institute said yesterday it had lowered its forecast for gross domestic product growth marginally to 2.6 per cent next year from 2.7 per cent predicted in July, but remained optimistic for an economic recovery.

"German economic activity gained pace in recent months and the upswing will continue and strengthen during the next two years," the Rheinisch-Westfaelisch Institute for Economic Research, one of Germany's six leading research institutes, said. In 2001, RWI expects economic growth in Germany to reach 2.9 per cent.

The European Commission forecasts the German economy to grow by 2.6 per cent next year and by 2.7 per cent in 2001.

Mid-size companies are also increasingly optimistic about future business, the German magazine Impulse said in a press release yesterday. Some "25 per cent of all midsize companies are expecting increasing sales in coming months, in the service sector even about 33 per cent do so," the magazine said, referring to a poll among 500 companies carried out by Forsa Institute.