(Photo: Opel)

BERLIN — Germanys central bank has lifted its growth forecast for the countrys economy this year and next, pointing to healthy domestic demand as unemployment remains low.

The Bundesbank predicts that the economy, Europes biggest, will grow by 0.5 per cent this year and 1.7 per cent in 2014. That is up from its forecast in June for 0.3 per cent expansion this year and 1.5 per cent next year.

The bank expects the economy will expand by 2 per cent in 2015. Germanys performance over recent quarters, though unspectacular, has been much better than that of many other European countries.

RELATED: German economy shows more signs of growth with industrial production up 2.4 per cent in June

Bundesbank President Jens Weidmann said Friday that low unemployment and low interest rates, among other factors, are supporting private consumption, and exports and imports should be bolstered by growth in other industrial countries.