BERLIN, March 22 (Xinhua) -- German lawmakers approved a 3.2-billion-euro (3.5 billion U.S. dollars) growth package on Friday, which provides tax reliefs and a reduction in bureaucracy for businesses.

Passed in the parliament's upper house, or Bundesrat, the so-called Growth Opportunities Act aims to "strengthen Germany's competitiveness as a business location with tax incentives," the Bundesrat said in a statement.

Although its volume is less than half of what was originally on the table, the adoption of the package is an "important signal," German Finance Minister Christian Lindner said on social media platform X.

Originally, the law was intended to be a 7-billion-euro-per-year package for all sectors, but the federal states in the Bundesrat vetoed it and sent it to a mediation committee because they feared the high costs. To make up for the cuts, Lindner declared that further steps must now follow to "improve the situation of our economy."

In 2023, Europe's largest economy shrank by 0.3 percent and the outlook for 2024 remains bleak. The German Macroeconomic Policy Institute (IMK) on Wednesday cut its forecast and now expects a continued recession due to the government's refusal to take on new debt.

The growth package provides measures including the expansion of tax incentives for research, and improved depreciation options and tax incentives for residential construction projects.

Under the new rules, 5 percent of the investment costs for new buildings can be written off for six years. "This is a really big boost for housing construction in Germany," said Federal Construction Minister Klara Geywitz.

The Federation of German Industries (BDI) welcomed the agreement, but Managing Director Tanja Goenner warned that "this tax relief will not provide a clearly noticeable stimulus for growth." (1 euro = 1.08 U.S. dollar) Enditem

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