The German government remains optimistic in its outlook for Europe's biggest economy, despite negative growth in the second quarter, the weekly Der Spiegel reported Sunday.
For the whole of 2014, the German economy could even notch up faster growth than the 1.8 percent it is currently predicting, the magazine said, quoting Finance Minister Wolfgang Schaeuble.
"Particularly thanks to domestic demand, there are chances that growth will be better than expected," according to an internal document from Schaeuble's ministry, Der Spiegel said.
In official data released earlier this month, gross domestic product (GDP) contracted by 0.2 percent in the second quarter, attributed to geopolitical tensions from the crises in Ukraine and the Middle East.
The ministry conceded that those crises posed the biggest risk for the German economy going forward.
Nevertheless, investment is rising and manufacturing orders are increasing.
"All in all, the indicators point to a continuation of growth, particularly on the side of domestic demand," the finance ministry paper said.