GDP will grow by 0.6pc this year, the country's central bank estimates, slashing its outlook from the 1.6pc expansion forecast in December.
"Once foreign demand picks up again, growth in the German economy will once again be more broadly based", Bundesbank President Jens Weidmann said.
"For economic growth and, to a lesser extent, for the rate of inflation, it is the downside risks that predominate as things stand today", the central bank said in a biannual update of its projections.
Even if the domestic economic upswing in Germany would be still "intact", the Bundesbank stated that the "downturn in industry" was mainly suffering from sluggish exports.
The bank is working on the assumption that exports will rise gradually over the second half of the year.
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The crucial vehicle industry is struggling from weak export demand.
The central bank also reduced its forecast for 2020 to 1.2% from 1.6%.
German's industrial output declined by 1.9 per cent in April, data from the Statistics Office showed.
German industrial output fell to 1.9% in April, the sharpest fall since August 2015, beating economist expectations for a 0.4% decline.