Germany expects foreign trade, the traditional backbone of its economy, to make no contribution to economic growth this year, as the euro zone's power house feels the pinch from its trading partners weaker growth.

The economy ministry said today it expected exports to grow by 2 per cent this year and imports to climb by 3 per cent, leading to an overall contribution to gross domestic product growth of -0.3 per cent.

Branding itself as "world champion" in exports for many years, Germany will rely on domestic demand for growth in 2012, especially private consumption, the ministry said.

It expects economic growth to slow to 0.7 per cent this year before picking up to 1.6 per cent next year. It had previously forecast 2012 growth of 1 per cent.

Germany has shown more resilience to troubles elsewhere in the euro zone, after fiscal prudence, steady demand for its high-quality products, and high competitiveness helped it weather a tough global environment.

Robust economic growth enabled it to more than halve its initial planned new borrowing in 2011 and take the moral high ground in urging ailing euro zone peers to save and consolidate, after busting euro zone deficit rules itself in 2010.

But the economy is now feeling the pinch of the sovereign debt crisis and many economists expect Germany to have fallen into a mild recession by contracting slightly in the last three months of 2011 and the first quarter of 2012.

"Germany is and remains the anchor for stability and growth in Europe," said economy minister Philipp Roesler when presenting the forecasts.

He said he did not expect Germany to enter recession.

"Due to the difficult environment abroad we expect a temporary dent in growth in the winter half. But we are firmly convinced that the German economy will return to higher growth in the course of the year," said Mr Roesler.

The ministry predicted unemployment would fall to 6.8 per cent this year and drop further to 6.7 per cent next year.

Reuters