BERLIN-Germany's economy is set to grow 3.4% this year as its recovery continues across almost all sectors, the government said Thursday in its updated forecast for this year. The growth forecast for 2011 is a more modest 1.8%.

The government's previous forecast in April predicted 1.4% growth this year, before Europe's largest economy posted a blistering 9% annualized rate of growth in the second quarter and other indicators, such as unemployment rates and business confidence, continued to suggest a more rapid rate of recovery.

"After a period in the on-ramp, our economy is now driving in the fast lane," Economics Minister Rainer Brüderle said.

A string of authorities and think-tanks have recently said Germany's economy will grow by more than 3% this year, including an influential group of institutes that advises the German government. In their semiannual report to the government last week, the institutes forecast a 3.5% rate of growth for 2010 and a 2% rate for 2011.

Germany is recovering from its worst recession since World War II-the economy contracted 5% last year. But as recovery has become more precarious in other developed nations hit by the financial crisis, including the U.S., Germany has soldiered on.

Mr. Brüderle said the recovery is being led by demand for German products abroad-particularly from China and India-as well as more recent signs of improved domestic demand. "The recovery has reached nearly all sectors of the economy and is gaining force," Mr. Brüderle said. He added that Germany will likely grow at around 2% annually over the next five years. 

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