Germany's economy contracted by more than first thought over the last three months of 2022, figures published on Friday showed, upping concerns Europe's industrial powerhouse could be headed for a recession.

Gross domestic product shrank by 0.4 per cent between October and December, the federal statistics agency Destatis said, revising down its initial estimate of 0.2 per cent. 

Russia's invasion of Ukraine triggered a sharp rise in energy prices in Europe, as Moscow dwindled important gas supplies to the continent.

The subsequent increase in inflation, climbing to a multi-decade high in Germany, dragged on the economy, said Destatis. 

Rising prices slowed consumer spending and business investments, the statistics body said.

The negative revision to growth figures showed that a "recession is in the making", said Carsten Brzeski, head of macro at the ING bank.

A "recession is in the making"- Carsten Brzeski, head of macro at the ING bank

The German economy had shown "more resilience than feared", with the help of government support and clement winter weather that took the sting out of the energy crisis, Brzeski said.

But there was "no guarantee for a strong rebound anytime soon", with signs pointing to another quarter of negative growth in the first quarter of 2023 and thus a recession, he said. 

Concerns that Germany would be dragged into a deep recession have been somewhat allayed, by contrast.

Officials in Berlin currently predict economic growth of 0.2 per cent in 2023, having previously anticipated a drop.