German economy may expand at a record pace of 3.6% this year, the state-owned development bank KfW said Friday.

The projected rate of expansion is stronger than the all-time high growth recorded in 2006, the bank said. Nevertheless, the economic growth is expected to slow to 2.3% in 2011.

In the second quarter, the gross domestic product grew 2.2% sequentially, which was the strongest growth rate since the reunification. During the third quarter, the expansion will ease to 1.2%, KfW said.

At the same time, business investment is expected to rise 7.8% this year and 6% next year. Germany now have the chance to close the gap torn in the country's economic performance by the crisis by the winter of 2011/12, a year earlier than previously thought, KfW chief executive Ulrich Schroeder said.