The German central bank now sees the national economy growing by at least 2% this year rather than a previously forecast 1.5%.
Bundesbank president Axel Weber told the Bild newspaper growth had begun last year and was now going to pick up steam.
The German government's official forecast is for growth of 1.6%, but Finance Minister Peer Steinbruck has predicted stronger momentum. Some economists foresee an expansion in 2006 of 2%, which Germany has not enjoyed since 2000.
'We must not be too optimistic,' cautioned Weber, citing the potential negative impact of higher oil prices, unfavourable exchange rate developments and the planned increase in VAT to 19% from 16%, which could dampen consumer spending.
