The Economy Ministry predicted that gross domestic product will grow by 3.6 percent, down from the 4.1 percent Germany’s previous government forecast in late October.
The picture has been clouded since then by a steep new wave of coronavirus infections fueled by the highly contagious omicron variant.
GDP grew 2.7 percent last year, according to preliminary official figures, rebounding from a plunge of 4.6 percent in 2020 when pandemic lockdowns were at their most severe. The government said this year’s projected growth will bring it back to its pre-crisis size.
“The consequences of the corona pandemic are still noticeable and many companies still have to struggle with them,” Economy Minister Robert Habeck said in a statement. “Nevertheless, our economy is still robust.”
Germany’s national statistics office has estimated that output in Germany fell by between 0.5 percent and 1 percent in last year’s final quarter. Forecasts are also shaky for the current quarter, raising the possibility of a technical recession.
But hopes are high that the picture will improve as the year progresses. On Tuesday, a closely watched survey showed business confidence unexpectedly picking up in January after a six-month slide.
That increase came thanks to a significant improvement in managers’ outlook for the next six months, even as their assessment of the current situation worsened.