Germany's robust growth in 1998 is expected to falter this year as knock-on effects from global financial crises take their toll on the world's third-largest economy.

Germany grew 2.8 per cent last year, accelerating from 2.2 per cent in 1997, its strongest performance since unification in 1990, the Federal Statistics Office said yesterday.

The figure was broadly in line with expectations but economists said the apparently strong data masked weakness in the final quarter of last year.

Investco Asset Management economist Mr Jorg Kraemer said: "1998 showed solid growth but reality is now headed in the opposite direction."

Mr Kraemer expected the 1998 growth rate to be revised down. He said to reach a calculation of 2.8 per cent GDP growth for 1998, German output must have risen 0.4 per cent in the fourth quarter. He said that was simply not possible given the fall in industrial output, which slumped 2.3 per cent in November.

According to a Reuters poll, German gross domestic product was flat in the fourth quarter compared to the third. Official fourth-quarter 1998 data will not be released until March.

For the first quarter of 1999, the poll sees German GDP growing an average 0.5 per cent on the quarter.