The German government expects the country's economy to grow by 1.7 per cent this year, unemployment to fall and wages to rise by more than they did in 2006, a draft of the administration's annual economic report showed.
In the draft, the government also said the European Central Bank (ECB) had made an important contribution to supporting economic growth by anchoring expectations for stable prices.
The government's forecast for this year, though positive, was less upbeat than the outlooks given by some of Germany's leading economic institutes, one of which has predicted the economy will expand by 2.1 per cent this year.
"Companies are investing actively, and generating new jobs," the government draft report read. "The signs are good that the recovery will continue this year."
The draft forecast unemployment in Europe's largest economy would fall by around 480,000 year-on-year in 2007, with the numbers in work rising by about 300,000.
The government forecast private consumption would rise by 0.3 per cent this year, with domestic demand up 0.9 per cent.
Exports, which have been the mainstay of the recovery, were seen rising 7.9 per cent on the year and imports by 6.8 per cent. The report is due to be released officially on January 31st.
Turning to the ECB, the report said the bank helped create a stable basis for the euro zone economy to grow. "The ECB guarantees a high degree of price stability for the entire euro region," it said.