Germany, Europe's biggest economy, will avoid the recession that has engulfed many of its partners in the region and return to growth in the first quarter of 2013, the Bundesbank said on Monday.
"As it currently looks, a plus in economic output can be expected in the first quarter of this year," the German central bank said in its February monthly report.
German gross domestic product (GDP) shrank by 0.6 percent in the last quarter of 2012, as weak demand in other eurozone countries hurt exports.
Were its economy to decline again in the current quarter, Germany would technically be in recession, defined as two quarters running of economic contraction.
But the Bundesbank joins other economic experts and observers who believe last year's dip in growth will prove short-lived.
"For the rest of this year, the economy is expected to pick up gradually, even if the external economic environment will provide no trigger for a sharp surge in demand," it wrote.
Although Germany has fared much better than its eurozone partners in the long-running debt crisis, it has not been able to escape completely unscathed and growth slowed throughout 2012.
German GDP grew by 0.5 percent in the first quarter of 2012 and then by 0.3 percent i