The German government upgraded Wednesday its forecasts for growth both this year and next year to 1.8 percent, saying Europe's biggest economy is "in an upturn."

Economy Minister Sigmar Gabriel said "Germany is on a solid path of growth, driven by favourable developments on the labour market, rising wages and increased employment. The main pillar of recovery is consumer spending."

Previously, the government had been pencilling in gross domestic product (GDP) growth of 1.5 percent in 2015, and 1.6 percent in 2016.

"The current momentum of domestic demand is pleasing. But we must not be complacent. We can't take economic success for granted. We must improve the medium-term growth perspective," Gabriel said.

The minister said the German economy would benefit from a slight pick-up in global growth, with the euro area in particular set to enjoy increased expansion.

Moreover, the decline in the value of the euro would help boost exports, which Berlin predicted would show "solid" growth both in 2015 and 2016, Gabriel said.

Last week, Germany's leading economic institutes already sharply increased their growth forecast for this year to 2.1 percent, saying the country's current robust recovery was being fuelled by cheap oil, the weak euro and a boom in consumer spending.