The Germany economy will slow down this year in the wake of the global financial crisis, but should remain fundamentally solid, Finance Minister Peer Steinbrueck said in an interview. "We must take the situation seriously," Mr Steinbreuck told Deutschlandfunk radio in reference to comments by US Federal Reserve chairman Ben Bernanke that raised concerns about a recession in the US.

Markets have also been shocked by the announcement by major US banks of huge losses owing to the collapse of the US market for high-risk mortgages, or subprime crisis. "We are far from finished" with turbulence on international financial markets, the German minister warned. But the "fundamentals remain robust" in Germany and elsewhere in Europe, he added.

The biggest eurozone economy grew by 2.5 per cent last year, according to provisional figures, and should "weaken somewhat" this year, Mr Steinbrueck estimated. The employment situation, which improved last year, would remain favourable, he added.

The government has already acknowledged that its 2008 growth forecast of two per cent is now out of reach, and according to the business daily Handelsblatt, it now expects the economy to expand by 1.7 per cent.