An advisory panel for German federal government, known as "Five Wise Men", upgraded its forecast for the growth of the German economy in 2014 on Thursday, citing strong domestic demands and slight contribution from foreign trade.

The Wiesbaden-based German Council of Economic Experts upgraded its forecast for German gross domestic product (GDP) growth in 2014 to 1.9 percent from its previous expectation of 1.6 percent in November last year.

"The increase of 0.3 percentage points ... reflects a better development at the start of the year, as well as further improvement in sentiment indicators," said the panel, which advises the German government, in a statement.

Growth impetus was likely to come mainly from domestic demands, especially increasing equipment investment in addition to reviving consumer spending, it said.

Foreign trade would also made "a slightly positive contribution" to the growth, it added.

The "Five Wise Men" forecast the number of employed people to rise by 0.7 percent to about 42.1 million in 2014, and jobless rate to decline slightly to 6.8 percent.

A nearly balanced budget would be reached, they said, while warning that national minimum wage planned by the German new coalition government and other measures in social policy might pose risks for the economy.

"The overall better outlook for this year can not hide the fact that the federal government is taking action in the field of labor market and social policy that may affect the growth potential of the German economy in the medium term," the statement read.

The panel's latest forecast was more optimistic than that of the German government, which expected the economy to expand by 1.8 percent in 2014, following a slight increase of 0.4 percent in 2013. Endi

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