Top economic institutes say Germany's economy is picking up despite the turmoil of the European debt crisis.

The institutes raised their growth forecast for this year to 0.9 percent from a forecast of 0.8 percent in their last outlook in October.

In a twice-yearly report, the economists said steps taken by European Union leaders had eased turbulence on financial markets and reduced economic uncertainty that had been weighing on growth. German business are more optimistic and low unemployment is making consumers more confident and willing to spend money.

However they said high borrowing costs for Spain and Italy show that "the debt and confidence crisis continues to smolder."


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