Germany's Ifo economic institute raised its outlook for the economy on Tuesday, based on rising exports and planned tax cuts.
The Munich-based economic researcher expects Germany's economy to expand by 1.7 percent next year and 1.2 percent in 2011. This compares with
its June forecast of a 0.3 percent contraction in 2010.
Rising exports were largely due to a brighter world economic environment, while incoming tax cuts would provide private consumption short-term stimulus, the institute said.
"In the forecast period, the road signals of economic activity in Germany remain on yellow, and a green phase is still not expected," it said. Both rising exports and private consumption were "moderate" as Germany's most important customer countries were not completely recovered and unemployment would gradually rise in line with the low level of production.
On average for next year, wage and salary earners in Germany would fall by 350,000, the institute predicted.
Ifo's upgraded expectations for the German economy also echoed the better expectations of other institutes this month. The Essen-based RWI
institute raised its 2010 growth forecast to 1.6 percent on Dec. 10, matching a Dec. 4 Bundesbank prediction, according to local media reports.