berlin jan 25 reuters  the german government has revised up its economic forecast with europes largest economy now expected to narrowly avoid recession this year as inflation eases according to its annual economic report published on wednesday it said gross domestic product was forecast to grow by 02 this year up from the autumn forecast of a 04 decline inflation is seen at 6 in 2023 down from the previous 7 forecast as energy prices ease following the initial shock of the energy crisis triggered by the ukraine war there are no signs of a significant recession which many observers have long considered inevitable economy minister robert habeck said in the report while the energy crisis and central banks interest rate hikes are making the german government cautious for this year habeck said the crisis triggered by the russian invasion of ukraine was now manageable germany has proven its resilience and has done very well economically he said he added that the initially very pessimistic scenario with a historic downturn feared in the event of a gas shortage had been averted energy supplies remain secure and stable he said but the task now is to become even more energetically independent he said german unemployment is seen at 54 in 2023 slightly above the 53 seen in 2022 the report said companies are also regaining confidence the economy ministry said on wednesday the closely watched ifo business climate index recovered further driven by considerably less pessimistic expectations machinery equipment investment was also forecast to grow by 33 in 2023 following 25 growth the previous year according to the government forecast despite the improved outlook headwinds remained export growth is expected to slow to 22 this year after an increase of 32 last year the report said among the biggest challenges for the economy are the war in ukraine and its economic consequences the weaker economic situation globally persistently high energy and consumer prices and the security of gas supplies it added reporting by christian kraemer writing by rachel more and maria martinez editing by madeline chambers and tomasz janowski