Germany's foreign and wholesale trade association (BGA) today revised up its export forecast for this year but said slowness in introducing structural reforms posed a long-term risk to competitiveness.
BGA head Mr Anton Boerner said he expected exports to grow by 3.5 per cent this year against an earlier forecast for 3 per cent growth.
Germany is the world's second-biggest exporter, with sales abroad helping to stave off recession by offsetting weak domestic demand.
However, companies have recently seen foreign demand hurt by the strong euro and the weak global economy, sparking fears that the pillar of growth is crumbling.
Mr Boerner warned Germany faced growing competition from countries such as China and India and needed to make business conditions more flexible to defend its market share.
"We have to say goodbye to the rigidity caused by regulations. We must face up to globalisation and international competition," Mr Boerner said.
Mr Boerner's comments came after data showing Germany's key Ifo business climate index rose for the third consecutive month to 89.2 in July, fuelling cautious optimism that Europe's biggest economy is in recovery.