Robert Habeck insisted on delivering the good news on Wednesday with a large printed chart.

It showed the development of gross domestic product (GDP) over the past few years, with the sharp decline in the Corona crisis in 2020. At the beginning of last year, the Federal Minister of Economics said at the presentation of the annual economic report in Berlin, researchers had seen a decline that was twice as high of economic performance as a result of the Ukraine war.

But the even bigger kink didn't materialize, the curve continues to go up.

"The country has shown what it can do," said the Green politician.

"We made a crisis manageable."

Julia Loehr

Business correspondent in Berlin.

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In mid-October, Habeck had predicted a 0.4 percent decline in gross domestic product (GDP) for 2023.

He now expects a small increase of 0.2 percent this year.

The Federal Government estimates that the inflation rate will fall.

After an annual average of 7.9 percent last year, an annual average of 6.0 percent is expected for 2023.

The ministry justifies both the improved growth prospects and falling inflation not least with the aid programs for private households and companies decided by the federal government.

A total of 200 billion euros have been allocated to the Economic Stabilization Fund (WSF).

Around 29.5 billion euros had been spent by the end of 2022, mostly to support the gas importer Uniper.

According to Habeck's ideas, the new year should be dominated by industrial policy.

Specifically, he spoke of a “transformative supply policy”.

With state support, companies should gradually bring their CO2 emissions towards zero.

State aid should flow primarily to areas in which the transformation is not yet economically viable, said Habeck.

"It's not about promoting everything," he emphasized.

He was also aware that his term might sound a bit "intellectualistic".

But it will not be enough to just continue the status quo.

As an example of an industry worthy of support, he named the raw materials industry, as a possible instrument a super write-off especially for companies that switch to climate-neutral technologies.

Finance Minister Christian Lindner (FDP) had already announced a growth package in the past few weeks.

He also spoke of improved depreciation options and investment premiums for companies.

In the past, German competitiveness was essentially based on low energy prices.

Since these no longer exist, competitiveness must now be improved through tax policy, argues Lindner.

The background to the debate is the United States' "Inflation Reduction Act", which provides $370 billion in subsidies for green industries.

Habeck did not want to go into the proposals from the Ministry of Finance at the federal press conference on Wednesday.

He emphasized the "good teamwork" with Lindner, but let it be known that he didn't think much of a general reduction in corporate taxes.

"As Minister for Economic Affairs, I understand the desire of companies for lower taxes." But the areas that could not develop themselves should be particularly encouraged.

The aim is to promote the transformation "into future markets".

The Ifo business climate is increasing

Habeck and his new head of department for economic policy, Elga Bartsch, were pleased about the business climate index of the Munich Ifo Institute, which was also published on Wednesday.

The mood in the German economy improved again at the beginning of the year.

The Ifo business climate rose by 1.6 points to 90.2 points in January compared to the previous month.

It is the fourth increase in a row.

Bank economists had expected an average improvement to 90.3 points.

Although companies were less satisfied with current business than in December, expectations for the next six months increased.

"The German economy is starting the new year with more confidence," said Ifo President Clemens Fuest.

Bartsch was optimistic that the economy will gain momentum in the spring.

Expectations are good across all sectors.

Consumption in private households is still developing weakly.

Habeck named securing the supply of raw materials, the diversification of foreign trade and alleviating the shortage of skilled workers as important tasks for this year.

As in the previous year, the Annual Economic Report contains a special chapter in which criteria other than GDP are used to measure welfare.

"Prosperity has a lot to do with social balance in the country," said Habeck.

The chapter should be further developed, some elements should also be integrated into the regular part of the report.

Habeck did not want to say how much cheaper the price brakes for gas, district heating and electricity will be for the federal government in view of the recent significant fall in energy prices.

It is still too early for that.

Just this much: "We have a good chance of getting through 2023 with prices that are no longer as high as in 2022."

The most recently agreed contracts testified to "external dimensions".