The German government raised forecast for its economic growth in 2014 on Wednesday, citing a stable labor market and recovery of investment. The economic ministry predicted that Europe's largest economy would expand by 1.8 percent in the new year, 0.1 percentage point higher than its previous expectation. "The German economy has embarked on a stable and broad-based recovery," said German Economic Minister Sigmar Gabriel in a statement. The stable labor market played a central role in the domestic dynamics, expecting the number of employed to increase by 0.6 percent to 42.1 million people, a new high record in history, said the government. Stable labor market and wage rises would encourage private consumption, and the capital investment and exports growth would also stimulate the economic expansion, according to the ministry. Investment in machinery and equipment would increase by 4.0 percent, following a 2.2 percent decline in 2013, and in construction to grow by 3.2 percent. Exports would regain its strength in the new year, with a growth rate of 4.1 percent. In the previous year, German exports only grew slightly by 0.6 percent. The export growth, however, would be outpaced by imports, which was expected to increase by 5.0 percent. Trade surplus should be narrowed, said the government. "Dynamics of German domestic economy is not only good news for Germany, but also for our partners in Europe. We come to our goal of reducing the imbalances in the euro area a little closer," Gabriel said. The government also said on Wednesday that it expected German economy to grow by 2.0 percent in 2015, adding that in a long term, the country's economy faces challenges, including insufficient investment in infrastructure and restructure of energy supply. Suffered from recession in its European neighbours and restrained growth of the global economy, Germany's economic output grew slightly by 0.4 percent in 2013, following an expansion of 0.7 percent in 2012, and a more dynamic growth of 3.3 percent in 2011. Consumption from private households and government were the main engine of the growth, rose by 0.9 percent and 1.1 percent respectively. Total investment decreased by 0.8 percent, while net exports made a negative contribution of minus 0.3 percentage points to GDP. Economists expected that German economy would accelerate in 2014. With receding of uncertainties in euro zone, and loose monetary policy in the common currency area, investment would be another pillar besides consumption to support the growth.