The German government slashed its 2013 economic forecast from 1 percent growth to 0.4 percent on Wednesday, a day after official data suggested a significant slow down of the German economy over the past year.

German Economic Ministry said domestic demands would be the main driving force amid a difficult external environment.

Economy Minister Philipp Roesler said the German economy was expected to "pick up again" after "a soft patch" in the winter. In 2014, the economy was expected to grow by 1.6 percent.

The latest 2013 forecast was in line with that of the German central bank, which adjusted its growth projection to 0.4 percent from 1.6 percent in December 2012.

A day earlier, Federal Statistical Office stated that German economy grew by 0.7 percent in 2012, compared with the previous year, much slower than 4.2 percent in 2010 and 3 percent in 2011.

Slow growth was attributed to a weak global economy and a crisis of confidence in the eurozone. "This slowdown is likely to be temporary, however," the Economic Ministry said in a statement.

The government expected the labor market to be robust in the new year, with disposable income continuing to rise by 2.3 percent and inflation remaining moderate at 1.8 percent.

"Germany will pioneer the economy and labor market in Europe in 2013," Roesler said.

He urged European countries to consolidate their budgets and make necessary structural reforms in order to "return to growth path, so that the euro remains stable."

The ministry called for efforts in recruiting more skilled employees in Europe's biggest economy as an essential for "future success in labor market." Training of skilled workers in Germany, as well as a wise immigration policy should be involved, it said.

Xinhua