Spain will raise its economic growth forecast for 2014 to 1% and sees growth picking up to 1.5% in 2015, Prime Minister Mariano Rajoy said.
"The GDP growth forecast will be revised upwards. The forecast is that we will reach growth of 1% in 2014 and 1.5%in 2015," he said during an annual state of the nation debate in parliament.
The government's existing official forecast for 2014 predicts growth of 0.7%.
Spain's economy shrank by 1.2% over the whole of 2013 as the nation struggled with the shattering aftermath of decade-long property bubble that imploded in 2008.
The euro zone's fourth-largest economy crawled out of recession with 0.1% growth in the third quarter of 2013 due in large part to a surge in exports.
Rajoy credited his conservative government's tough economic reforms and austerity policies for pulling Spain back from the precipice of a full-blown bailout, widely feared in mid-2012.
Spain has gone from being "a burden for Europe to a motor," he told parliament.
"The possibility of a rescue, of abandoning the euro, the lack of confidence, are words that no longer make sense," he added.
Though avoiding a widely feared economic rescue in mid-2012, Spain's government obtained a €41.3 billion rescue loan from the euro zone to save tottering banks, whose assets had been hammered by plunging property values.
Besides slashing spending to rein in Spain's yawning public deficits, the government reformed the labour market in 2012 by cutting dismissal costs and making it easier to change work conditions.
Spain is also grappling with an unemployment rate of just over 26%. Rajoy reiterated his government's prediction that Spain's battered economy would generate jobs this year.