Europe's powerhouse economy should expand by 0.4 percent in 2013, Economy Minister Philipp Roesler said, a sharp downwards revision from a previous forecast of 1.0 percent. In 2014, growth should be 1.6 percent, he said.

"There is every reason for confidence," Roesler said in a statement as he presented the government's annual economic report.

"We believe that the weak phase this winter will be overcome in the rest of the year and that our economy will get back into gear," added the minister.

Germany has until recently fared better than most of its debt-stricken eurozone partners in the crisis but the economy began to slow sharply at the end of last year.

Data published on Tuesday showed Germany's powerhouse economy grew by a mere 0.7 percent in 2012 after a stellar 2011 when GDP expanded by 3.0 percent.

And the economy seemed to have slammed abruptly into reverse in the fourth quarter of the year, as officials estimate a contraction of 0.5 percent.

Germany has been hit not only by the woes of its eurozone trading partners but also by a slowing global economy that has reduced demand for its all-important exports.

Nevertheless, unemployment remains at low levels for the moment, although analysts have warned that this too cannot last forever.

Roesler himself said there would be around 60,000 more people unemployed in 2013 than in 2012 but said this period of weakness would be "temporary."

"In the course of 2013, growth should noticeably pick up. It will be driven primarily by domestic demand," he added.

Germany would achieve its goal of registering a structurally balanced budget in 2014, Roesler said.