THE German economy will expand by around 1.25 per cent this year, the DIW economic research institute said yesterday, noting weakness in the last three months of the year.

The forecast is lower than recent statements made by the government's panel of independent economic advisors, the Five Wisemen, and those made by Germany's six leading research institutes, but a little higher than government forecasts.

The institute said in its weekly report that economic growth would be flat in the fourth quarter compared to the previous quarter, but would rise 1.5 per cent above the levels of the same quarter a year ago.