The German economy, Europe's largest, will grow by 1.4 per cent this year, Economy Minister Rainer Bruederle said yesterday, leaving a previous forecast made in January unchanged.

Next year, the economy should perform slightly better, Mr Bruederle said, with growth of 1.6 per cent driven by exports, the backbone of the German economy. "The economic recovery is coming from abroad. The improvement in the global economy and world trade is supporting the German economy to a great extent," Mr Bruederle told reporters in Berlin.

The economy was also expected to see stronger domestic demand next year, he said. He said the German labour market was "unbelievably robust", and the fears of a sharp rise in unemployment due to the financial crisis had failed to materialise. The government's forecasts were slightly more optimistic than those of the International Monetary Fund which last month slashed its projection of output in Germany to 1.2 per cent for 2010.