BERLIN: Germany’s economy, the biggest in Europe, should see brighter days ahead after tumbling in the fourth quarter of last year, the economy ministry said on Monday in its regular monthly report.

“The prospects for the German economy are gradually improving. Forward-looking indicators point to a possible end to the current weak phase,” the report said.

“The low point of the global economic weakness appears to be already past,” the ministry added, noting also that the situation the international financial markets had also calmed considerably.

Broadly speaking, the German economy has weathered the eurozone debt crisis better than many of its neighbours.

But with a large part of its all-important exports going to fellow eurozone countries, Germany has not been immune to the turbulence and gross domestic product expanded by a mere 0.7 per cent last year after 3.0 per cent in 2011.

And the economy seemed to have slammed abruptly into reverse in the fourth quarter of the year, as officials estimate a contraction of 0.5 per cent, raising fears Europe’s powerhouse could slip into recession.

The economy ministry acknowledged that “weak construction and industrial activity indicate a drop in total economic activity in the final quarter of 2012” but stressed this low point should be “quickly overcome.” Official figures for the fourth quarter are due to be published on Thursday.

In recent weeks, confidence indicators have pointed to a recovery, notably the closely watched Ifo business sentiment index, which rose to a seven-month high in January.

Consumer confidence also rose in January while the labour market continued to show its resilience by falling to a four-month low in January on a seasonally adjusted basis.

Meanwhile, German unemployment unexpectedly declined in January, adding to signs that a pick-up in Europe’s largest economy is gathering pace.

The number of people out of work fell a seasonally adjusted 16,000 to 2.92 million, the Nuremberg-based Federal Labour Agency said recently. Economists predicted an increase of 8,000, the median of 31 estimates in a Bloomberg News survey shows. Joblessness declined by 2,000 in December instead of a previously reported gain. The adjusted jobless rate dropped to 6.8 per cent this month, matching a two-decade low.