The German government could raise its official 2011 growth forecast after Chancellor Angela Merkel indicated yesterday Europe’s biggest economy would expand faster than expected this year.

“Growth this year should be closer to three per cent than 2.5 per cent,” she told a trade association in Berlin, despite mounting concern that Germany, which is heavily dependent on exports, could be facing a slowdown.

Ms Merkel’s comments suggest that the government – which has so far been pencilling in gross domestic product growth of 2.6 per cent – may raise its official 2011 forecast when it is announced at the end of October.

Indeed, economists and business leaders have all been much more optimistic all summer, suggesting growth could actually come out at three per cent or even higher.

Nevertheless, the ongoing eurozone debt crisis could pour cold water on such optim-ism, with the European Central Bank and the European Commission both downgrad-ing their economic forecasts for the single currency area recently.

And German growth, too, failed to meet expectations in the second quarter, coming out at a meagre 0.1 per cent.

One top think-tank, the IfW in Kiel, even suggested Germany was “on the edge of a recession”, predicting growth would slow from an anticipated 2.8 per cent this year to just 0.8 per cent next year.