BERLIN - THE German banking federation halved its 2009 growth forecast for Europe's biggest economy on Wednesday but said that the world financial crisis will not lead to a global recession.

The Association of German Banks (BdB) said that it now expects gross domestic product growth of half a percentage point next year, down from its previous forecast of around one per cent.

But it added: 'Even if the perspectives for the world economy have clouded noticeably in recent months, a global recession is still not to be expected,' BdB head Manfred Weber said.

Prices for raw material, in particular oil, have fallen considerably, which should lead to an easing of inflationary pressures over coming months and support the global ecomomy next year, Weber said in a statement.

The federation added that the government-led rescue packages for banks hit by the financial crisis 'is an important contribution to restoring trust in the banking sector, to achieving orderly circumstances in financial markets again and thereby stabilising conditions for the real economy'. -- AFP