The German government now expects the economy to grow by at least 1.9 percent this year, up from a previous forecast for 1.7 percent, Labour Minister Franz Muentefering told a German newspaper.
"We expect growth of 1.9 percent this year," Muentefering said in comments to appear in the Monday edition of the Rheinische Post. "And I would quietly add an 'at least' to that."
German gross domestic product (GDP) expanded by 2.7 percent last year, its best rate in six years, driven by robust exports, investment spending and a modest pickup in private consumption.
Economists had feared a hike in value-added tax (VAT), which went into effect at the start of 2007, would sharply slow the economy this year. But confidence has grown in recent months that Europe's largest economy will weather the tax increase and expand by 2 percent or better.
Three of Germany's leading economic think tanks raised their 2007 growth forecasts last week, with the Kiel-based IfW institute predicting an expansion of 2.8 percent.
Economy Minister Michael Glos, who is responsible for presenting the government's forecast, said late last month that the 1.7 percent forecast looked overly cautious.