German output stagnated in the last quarter of 2022 and rose 1.9% for the full year, suggesting that Europe's biggest economy may - at least in winter - avoid a recession, Reuters reports.

Annual gross domestic product (GDP) growth was just above the average forecast of 1.8 percent, according to a Reuters poll of economists. GDP in 2022 was 0.7% higher than in 2019, the year before the COVID-19 pandemic began.

Thomas Gitzel, chief economist at VP Bank, said the economy has exceeded low expectations.

A recession is usually defined as two consecutive quarters of decline. But there are growing signs that the economy, which grew in the third quarter, may avert the worst of the downturn caused by reduced energy supplies from Russia.

Despite this backdrop boosting inflation, German business sentiment rose more than expected in December, according to a survey last month.

In Britain, where the broader economic outlook for 2023 remains bleak, data showing modest growth in November suggest a recession has been avoided.

Monika Schnitzer, an economic adviser to the German government, said domestic inflation likely peaked as global energy prices fell, adding that she expects natural gas prices to continue falling this year.

Germany's government deficit in 2022 was 2.6 percent of GDP, the Statistics Office added.