Germany is expected to narrowly avoid a recession this year, the government said on Wednesday, as Europe's biggest economy withstands the aftershock of the Ukraine war better than prior projections had estimated. 

The country is forecast to obtain economic growth of 0.2% in 2023, the economy ministry shared in its latest projections. In October, Berlin was preparing for a contraction of 0.4% amid soaring energy costs and a cost of living crisis.

Inflation is now seen at 6% in 2023, down from the previous 7% forecast.

We have avoided the worst scenarios, says Habeck

"We now expect the recession to be shorter and milder, if it happens at all," German Economy Minister Robert Habeck told a press conference in Berlin.

"We have been able to avoid the worst scenarios," he said, but stressed that "the crisis is not over." 

Massive government intervention helped to keep energy costs for households down after Russia reduced deliveries of natural gas last year. 

The German government recently unveiled a €200 billion ($212 billion) support package to soften the blow from the energy crisis, including a cap on electricity and gas prices.

German Chancellor Olaf Scholz has also sought energy alternatives in Canada and announced an energy security deal with the UAE. 

The expected downturn was also positively impacted by a mild winter and falling wholesale gas prices. 

"The German economy as a whole has proved resilient," the ministry said in an annual report. "Consumers have also done their part by making major energy savings."

los/kb (dpa, AFP, AP, Reuters)