BERLIN (Reuters) – The German economy will grow slightly this year, the European Commission said Monday, revising upwards its previous forecast for a 0.6% contraction.

In its winter forecasts, the European Commision envisages 0.2% GDP growth for Europe’s biggest economy in 2023, more than it expected in autumn due to the easing of energy prices and policy support to households and firms.

German gross domestic product decreased 0.2% quarter on quarter in adjusted terms in the fourth quarter.

Despite a recent improvement in confidence, the economy is expected to suffer another mild decline in early 2023, as energy prices for households are still increasing and government support for January and February will only be disbursed in March, the Commission said.

Growth is expected to rebound to 1.3% in 2024, according to the Commission’s forecasts.

German consumer prices, harmonised to compare with other European Union countries, peaked at 11.6% in October, driven by the surge in energy prices and rising input costs. Since then, consumer prices have eased somewhat.

In 2023, the pass-through of elevated wholesale energy price growth is expected to be mitigated by the caps on gas and electricity prices.

However, still rising producer costs are set to keep inflation high, at a projected 6.3% in 2023, the Commission said. In 2024, German inflation is expected to de decline to 2.4%.

(Reporting by Maria Martinez, editing by Rachel More, Kirsten Donovan)