Germany's Deutsche Bank, cut its forecast for German growth this year to 0.1 per cent from 0.5 per cent.
"We are talking about a mini-recession," said Deutsche economist Mr Ulrich Beckmann said today.
Deutsche, Germany's largest bank, trimmed its forecast because the expected US-led attack on Iraq and related rise in oil prices and fall in consumer confidence should further sap the economy's momentum, it said in a research note.
The bank expects negative growth in the fourth quarter and first quarter of 2003, but a US success in the Middle East should lead to a marked growth spurt from the second quarter of next year, it predicted.
Deutsche is forecasting Germany will growth 0.6 per cent in full-year 2003.
A number of commercial banks and research institutes have cut their forecasts for German growth in recent weeks.
The Reuters Purchasing Managers' Index released earlier this week showed Germany's manufacturing sector posted its biggest contraction since January in September, with demand battered by concerns about the strength of the economic upturn and the threat of war in Iraq.
The country's closely watched Ifo business climate index also fell for the fourth month in a row in September, as firms' expectations about the future remaining poor.