German Central Bank raises growth forecast

Germany's central bank raised on Friday its forecast for German growth this year and next as the biggest powerhouse in Europe cashes in on gradual global recovery.

The Bundesbank said in its twice annual outlook that it expected German gross domestic product (GDP) to expand 1.9 per cent in 2010, instead of by 1.6 per cent it had expected in December.

Next year, the economy is seen as growing 1.4 per cent, against the 1.2 per cent previously tabled.

"The main drivers will initially be exports and stimuli from the inventory cycle, whereas the importance of government stabilisation measures will gradually wane," the Bundesbank said, referring to stimulus efforts taken to fight Germany's worst recession since World War II last year.

"In the medium term, business investment will pick up, and private consumption, too, is likely to increase again."