The German government's economic advisors, known as the Five Wise Men, upgraded Thursday their forecast for economic growth this year after a better-than-expected start to 2014.
"The German council of economic experts has updated its forecast for 2014. It is now pencilling in gross domestic product (GDP) growth of 1.9 percent," the panel said in a statement.
"The upgrade of 0.3 percentage point (compared with their earlier prognosis) reflects the improved trend at the beginning of the year, as well as the brighter sentiment indicators," the statement said.
Positive growth impulses would come mainly from domestic demand, with both consumer spending and investment in equipment likely to pick up, the panel predicted.
But foreign trade would also make a "small positive contribution."
Nevertheless, "the overall improved outlook for the year cannot hide the fact that the government has drawn up measures in the areas of labour market and social welfare policy which could have a dampening effect on the economy's growth potential in the medium term," the panel complained.
The new grand coalition government of left and right, headed by conservative Chancellor Angela Merkel, has decided to introduce a national minimum wage, which critics say could harm the economy.
Although the panel is known as the Five Wise Men, it is made up of four men and one woman.
The panel's forecasts serve as a basis for the government's own projections. In February, Berlin said it is pencilling in growth of 1.8 percent for the current year, in line with forecasts from the EU Commission and the country's leading economic think tanks.
The German economy, Europe's biggest, has fared better than its European neighbours, sidestepping the recession into which the financial crisis pushed most of the eurozone thanks to deep-reaching and painful economic and labour market reforms implemented a number of years ago.
It notched up modest growth of 0.4 percent in 2013 and 0.7 percent in 2012.
But economic momentum has been picking up in recent months and growth in the first quarter of this year is expected to be higher than the 0.4 percent recorded in the fourth quarter of 2013.