The German economy, Europe's biggest, should grow by 3% this year, the country's central bank has said.
The Bundesbank has raising its previous forecast of 1.9% following a very strong performance in the second quarter of this year.
The Bundesbank said that more than half of the decline in production that stemmed from the global economic crisis has now been made up on because of favourable conditions both at home and abroad.
In 2009, the German economy shrank by 4.7%, its worst recession since World War II. This year could see the strongest expansion since 2006, the central bank said.
Producer prices rise in July
Earlier, figures showed that German producer prices, the cost of goods at the factory gate, rose by more than expected in July, official data showed today. But the core rate remained modest when energy costs were stripped out.
Producer prices gained 0.5% from June and jumped 3.7% from July 2009, according to the national statistics office Destatis. Analysts had forecast increases of 0.1% and 3.3%, respectively, for Europe's biggest economy.
The annualised figure marked a sharp increase from the two previous months, after gains of 0.9% in May and 1.7% in June, Destatis said.
On August 10, the office revised its figure for overall German inflation in July up to 1.2%, matching the high for the year posted in May.
A breakdown of the latest figures showed energy costs were again the main factor behind the producer price increases and when they were stripped out, prices were 2.4% higher on the year and 0.1% higher on the month.
