Germany's economy will see a feeble growth of one percent in 2006 and its budget deficit will breach the three percent rule set in the European stability pact for 5th year in a row, economic advisors said on Wednesday.

In their annual report, the "five wise men" panel of independent economic advisors see only a marginal improvement in the hard-pressed labor market in the world's third largest economy.

The panel forecast that Germany's unemployment is likely to remain as high as two digits percent next year, meaning the jobless population will be above 4.8 million.

The wise men also predicted that the country's budget deficit will be 3.3 percent of GDP next year.

However, various indexes of Germany's economy show signs of recovering.

On Monday, the Ministry for Economics and Labor said industrial production in Germany improved in September due to strong export.

Production at factories, utilities, construction sites and mines rose by a higher-than-expected 1.2 percent from August, when it fell 1.5 percent. Economists had expected a 0.9 percent expansion.

German factory orders, regarded by economists as a key economic indicator, rose 2.8 percent in September, with both foreign and domestic sales rising, the ministry said in a report days ago. Economists had expected a 1.1 percent increase.

The Ifo Institute said Oct. 25 that business confidence rose to a five-year high In September.

With orders showing demand at home recovering too, Germany's economic growth is gaining strength after grinding to a halt in the second quarter.

Source: Xinhua