The German government slashed its 2013 growth forecast Wednesday to 0.4 per cent, in another sign the euro debt crisis is dragging down the nation's economic performance.

Berlin had previously forecast 1-per-cent growth for Europe's biggest economy.

After a weak start, 2013 should see gross domestic product growth pick up speed in the second half, according to government projections, with the economy projected to expand by 1.6 per cent in 2014.

“There is every reason for optimism,” said Economics Minister Philipp Roesler releasing the new growth projections in Berlin. “In 2013, Germany will be both a leader in business and the labour market.”

The publication of the government's latest forecasts came as the nation's political establishment gears up for a national election, expected in September.

Economic growth slowed to 0.7 per cent last year from a solid 3 per cent in 2011, the statistics office said Tuesday.

The slowdown in growth came in the wake of the recession and fiscal austerity gripping Germany's key trading partners in the 17-member eurozone.

In his comments Wednesday, Roesler called on eurozone member states to press on with efforts to reform their state finances and to boost economic competitiveness.

“Our European partners have to tackle, in a credible way, both fiscal consolidation and structural reforms,” he said.

The government expects the unemployment rate to average 7 per cent this year, with employment growing by 15,000 from last year's record level to 41.6 million. - Sapa-dpa