German unemployment is seen at 5.4% in 2023, slightly above the 5.3% seen in 2022, according to the report.
Germany is expected to narrowly avoid recession this year with price-adjusted growth of 0.2%, the report said, in line with a report by Reuters last week.
Economy Minister Robert Habeck plans to explain the details from the report later on Wednesday.
“The situation at the start of the year is more favourable than assumed in the autumn projections,” the report said. “Nevertheless, there are still uncertainties for the German economy.”
Facing soaring gas prices due to the war in Ukraine and supply bottlenecks, consumer prices exploded last year, and the government and economists saw no way around a recession.
However, a 200-billion-euro relief package to shield consumers from surging energy prices, a mild winter and a readiness to save energy have changed the picture.