German central bank, the Bundesbank, on Monday said it expected the German economy to expand considerably in the coming months thanks to a strong rebound of the manufacturing industry.
"Despite a very modest entry into the final quarter, it is expected that the German economy will expand considerably in the winter season," said the Frankfurt-based central bank in its monthly report.
The bank said the buoyant domestic economy would be "complemented by a significant increase in industrial activity," as reflected by the steep rise in permits for residential buildings and a good consumer sentiment. It expected that production in automotive industry in specific was likely to be much higher.
In its earlier forecast, the Bundesbank said that German economy would grow by 1.7 percent in 2014, after a moderate expansion of 0.5 percent in current year.
German industry output in October dropped by 1.2 percent in calendar and seasonally-adjusted terms, signaling that Europe's largest economy would not recover evenly in the final quarter of 2013.
The morale of business and consumers, however, remained at a high level. Investors' confidence in German economy in December increased to its highest since October 2009. Firms' expectation for business developments also rose to the highest point since spring 2011, while German consumers' willingness to buy reached a seven-year high in November.