Christmas Address

Köhler said 2006 had been a good year for Germany. He cited the image that the summer's Soccer World Cup had shown the world, the sinking unemployment rate and rising rates of investment.

"Our products are in demand around the world and the reforms put into place last year are beginning to take effect," he said. "It was worth the trouble."

But Köhler said Germany should not rest on its laurels, and that further lowering of the jobless rate was one of the country's most serious tasks for next year. He said that would be the decisive response to problems of poverty and social exclusion, issues that have taken on high profiles in the German media this year.

He also indirectly addressed the long-running, and sometimes bitter, battle in Chancellor Angela Merkel's coalition government over its controversial health reform plans.

"Fair argument ... and the struggle for reasonable compromises are essential in a democracy," said Köhler.

"Use the opportunity"

Merkel's coalition, consisting of her conservative political bloc of the Christian Democratic Union and the Christian Social Union along with the Social Democrats, has also come under fire from economists and business for failing to press on with far-reaching economic reforms.

Köhler, who is a former head of the International Monetary Fund, has been on the side of those arguing for rigorous economic change in Germany.

The current economic upswing in Germany is providing a tailwind, said Köhler. We should "use the opportunity," he said.

"We all feel a sense of responsibility for Germany,' Köhler said in his address, which has been taped but is to be broadcast nationally on Monday evening. He also expressed confidence about the nation's economic outlook for 2007.

His strong opinions on the economic way forward have not set well with everyone. Köhler's position is mainly ceremonial and some have felt he has exceeded his mandate and tried to influence political decisions.