Berlin - German President Horst Koehler called Tuesday for the government to show unity, in the face of the global economic crisis which Germany is in the grip of.

"The crisis is no backdrop for show fights, but rather a test for democracy as a whole," Koehler said during an address given annually by the head of state.

"Even in the run-up to a federal parliamentary election there is no suspension of the responsibility of government," he said, in reference to recent infighting within the coalition government ahead of a general election due in September.

The president, whose role in Germany is largely ceremonial, lauded the government's action to stem the economic crisis.

"The direction being pursued is right," he told the audience gathered for the event at a church in Berlin.

Koehler, who is a former managing director of the International Monetary Fund (IMF), condemned the unbridled freedom of the financial markets, demanding that "the market needs rules and morals."

"We are now experiencing that the market doesn't correct itself. It needs a strong state, which sets rules for the market and ensures their enforcement," Koehler said.

His comments supported German Chancellor Angela Merkel's demands for greater financial regulation ahead of a summit of the Group of 20 (G20) leading world economies in London next week.

Koehler, of Merkel's Christian Democrats (CDU) is himself standing for re-election to a new five-year presidential term in May.

His main challenger to the post is Gesine Schwan of the government's Social Democrat (SPD) coalition partner.

Schwan welcomed the president's comments on the global financial crisis.

"It is a statement of opinion that many have long waited for," the presidential candidate told German Press Agency (dpa)