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The German government expects the country's gross domestic product (GDP) to increase by 0.4 per cent in 2023, up from 0.2 per cent projected in late January.

Next year, Europe's largest economy is to grow more strongly again at 1.6 per cent, reports Xinhua news agency.

"After the Covid-19 crisis, the German economy is also proving to be adaptable and resilient in the energy crisis," Minister for Economic Affairs and Climate Action Robert Habeck said in a statement on Wednesday.

The "extensive support and stabilization measures taken by the German government to cushion the increase in costs for companies and the loss of purchasing power for private households prevented a more pronounced slowdown in the winter half-year", a Ministry statement said.

To cushion high energy prices for citizens as well as companies, relief packages in Germany included a massive 200 billion euro ($222 billion) price brake for electricity and natural gas.

The country's economy had "come through the crisis year 2022 better than initially feared", the German Economic Institute (IW) said at the end of March.

Nevertheless, the "big recovery will not take place in 2023", said IW economic expert Michael Groemling.

Even before the Covid-19 crisis, German companies had built up a "huge investment backlog", IW warned.

Due to high energy prices, inflation and the general global uncertainty, catching up could now be further delayed.

"If investments are not made for too long, there is a risk of structural damage to the entire economy," said Groemling.

"Tax burdens, energy costs and a shortage of skilled workers are already competitive disadvantages for the German economy."