German growth will slow sharply this year, the government said yesterday, but vowed Europe’s top economy would dodge recession despite the ongoing eurozone crisis and weaker demand from emerging markets.

Berlin slashed its forecast for output in 2012 to 0.7 per cent from a previous estimate of one per cent but predicted that Germany would rebound next year to expand by 1.6 per cent.

Nevertheless, Economy Minister Philipp Roesler insisted: “There can be no talk of recession.”

He said the economy likely shrank by 0.3 per cent in the final quarter of last year but expected “moderate” growth of 0.1 per cent in the first quarter of 2012, avoiding recession, defined as two quarters of negative growth.

“Germany is and remains an anchor for stability and growth in Europe,” the minister said as he presented the twice-yearly government forecasts.

“After two extraordinarily strong growth years, the German economy is still in robust form. However, due to a difficult external environment, we are expecting a temporary dip in growth in the first half of the year,” he said.

“Nevertheless, we are firmly convinced that the German economy will find its way back to a strong growth path in the course of the year.”

The “main risk” for growth in 2012 is “without doubt a worsening of the crisis in Europe,” the minister said.

He said the projections were based on the assumption of a relaxation in market tensions and a rapid solution to the eurozone debt crisis.

The German economy suffered badly during the 2008 global financial crisis, registering its worst recession in six decades.

But due to multi-billion-euro growth packages ploughed into the economy and a scheme allowing workers to reduce their hours while keeping their jobs, Chancellor Angela Merkel managed to keep a lid on unemployment and growth rebounded strongly.

After shrinking by around five per cent in 2009, Germany marked record growth of 3.7 per cent in 2010 and continued to grow at a decent clip of three per cent last year.