Bundesbank upgrades German growth forecasts for 2015, 2016

(FRANKFURT) - The German central bank, or Bundesbank, upgraded Friday its growth forecasts for this year and next year, saying activity in Europe's biggest economy was being supported by both domestic and foreign demand.

The Bundesbank said in a statement it was expecting gross domestic product (GDP) to expand by 1.7 percent in 2015, by 1.8 percent in 2016 and 1.5 percent in 2017.

Previously, the central bank had been pencilling in growth of 1.0 percent for this year and 1.6 percent for next year.

"The German economy has recovered from the lull in mid-2014 more quickly than expected and has returned to a path of growth that is supported by both internal and external demand," the Bundesbank said.

"The domestic economy is notably reaping the benefits of the favourable labour market situation and substantial income growth. This is having an effect on private consumption as well as on housing construction," it wrote.

"Foreign business is currently burdened by dampening effects emanating from the global economy, but this is balanced out by the depreciation of the euro and the improving economic recovery in the euro area. Moreover, the global economy is likely to pick up steam again in the near future," the Bundesbank added.