BERLIN, Germany - Chancellor Angela Merkel warned Germans that the economy, Europe's biggest, would experience a harder time next year than in 2012 and cautioned too that the eurozone debt crisis was far from over.
In her annual New Year address published Monday, Merkel said: "In fact, the economic environment next year will not be easier, but more difficult", adding: "The crisis is a long way from being beaten."
Although top exporter Germany has managed to hold up to the crisis fairly well, growth has slowed here as well since the beginning of the year.
After expanding by 0.5 per cent in the first quarter of 2012, gross domestic product (GDP) grew by just 0.3 per cent in the second quarter and a mere 0.2 per cent in the third quarter.
And in October, the government slashed its forecast for economic output next year to 1.0 per cent, compared to 1.6 per cent previously anticipated.
The country's gloomy central bank has said Germany may even flirt briefly with recession early next year.
The Bundesbank also forecast that Germany would only grow by a meagre 0.4 per cent next year.
Nevertheless, "it has been possible this year to have the lowest unemployment and the highest level of employment since the reunification" in 1990, Merkel recalled.
And a slowdown next year "should not leave us discouraged but should spur us on", said the chancellor, according to the text of her speech released in advance by her office.
Turning to the eurozone's efforts to tackle its three-year debt crisis, she judged that "the reforms that we have decided are beginning to work".