Germany slashed its estimate for growth this year by more than half on Wednesday, as the debt crisis hits the top European economy, but forecast a solid rebound in 2014.
The German economy, the powerhouse in Europe, should expand by 0.4 percent in 2013, Economy Minister Philipp Roesler said.
This was 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 that Germany's 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 problems of its eurozone trading partners but also by a slowing of the global economy which has reduced demand for exports which are vital to German growth.
However, analysts said they still expected a bounce this year.
"Following the soft patch (in the fourth quarter), we still expect the German economy to recover swiftly in 2013," said analysts at Barclays Capital.
Roesler also said he expected the fourth quarter to be the low point in the economic cycle, but declined to answer questions about whether Germany could suffer a technical recession -- two successive quarters of negative growth.
"All the early indications we have are absolutely positive," he said.
He pointed to industrial orders and business confidence data as signs that the economy was likely to pick up in the course of this year.
"In the course of 2013, growth should noticeably pick up. It will be driven primarily by domestic demand," he added.
Industrial orders in October and November were up by 1.6 percent overall compared to the two-month period before.
And figures in December showed that business confidence in Germany, as measured by the closely watched Ifo institute's monthly survey, improved by more than expected.
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." The unemployment rate would be "virtually unchanged" this year compared to 2012.
Last year, the annual average jobless total fell by 78,837 to 2.897 million on a raw or unadjusted basis and the annual average jobless rate fell to 6.8 percent from 7.1 percent a year earlier.
Germany would achieve its goal of registering a structurally balanced budget in 2014, Roesler said.