The Bundesbank, Germany's central bank, described increasing optimism over the state of the country's economy in its latest monthly report published on Thursday.
The influential ifo Institute, meanwhile, raised its forecast for growth in Germany's gross domestic product (GDP) for the current year from 0.2% to 0.4%, pointing to indications of a tepid recovery for Europe's largest economy.
The Bundesbank said that German GDP, adjusted for inflation, is likely to rise again slightly in the second quarter.
Although the German economy continues to face headwinds, there are increasing positive signs pointing to a recovery, the bank's experts wrote in the report.
In the first quarter, the economy surprised with very modest growth of 0.2%, supported by exports and increased construction investments.
According to the Bundesbank, industry is slowly working its way out of its weak phase. Industrial production rose in April and demand from abroad in particular is showing signs of improvement - albeit from a low level.
Private consumption, which has helped prop up the economy through a period of contraction, could increase slightly in the current quarter, the Bundesbank forecast.
Consumers were still reluctant to spend more at the start of the quarter. However, the bank's experts wrote that consumers' scope for spending is currently improving noticeably, mainly thanks to a sharp rise in wages.
High interest rates, however, continue to dampen investment, which is having a particularly negative impact on residential construction, which fell significantly again in April after being boosted early in the year by unusually mild weather in Germany.
Ifo's improved growth forecast
"The German economy is slowly working its way out of the crisis," ifo's economic director, Timo Wollmershäuser, said in Berlin on Thursday.
He said it was not a summer fairytale but "new hope is emerging."
Next year, the ifo expects economic growth of 1.5%.
The institute said that the purchasing power of private households is increasing, while global trade and industrial production should continue to recover in the second half of the year.
The easing of monetary policy will also support investment, said Wollmershäuser. He said the institute expects the European Central Bank to cut interest rates twice more this year.
Rate cuts could "perhaps initiate a turnaround in the construction industry at the end of the year," Wollmershäuser said.
"The course is generally set for recovery," said Wollmershäuser.
But the ifo Institute's president, Clemens Fuest, said that the lack of a clear economic policy and bureaucratic burdens from the German government remains an issue.
Fuest said that the economy was "brightening up a little, but the structural problems remain unsolved."
The institute also now forecasts inflation to ease further to 2.2% this year and 1.7% next year.
However, the number of unemployed people in Germany is forecast to rise from 2.6 million to 2.7 million over the course of this year, hitting an unemployment rate of 5.9%.
But next year, the number of unemployed is expected to fall again to 2.6 million.
The number of people in employment is expected to rise slightly from 45.9 million to 46.1 million this year and to 46.2 million next year.
According to the ifo Institute, the German government's budget deficit will fall significantly from €99 billion ($106 billion) to €73 billion this year and to €54 billion next year.
Germany's large current account surplus, which has drawn international criticism, is likely to rise further from €258 billion to €312 billion this year and then to €306 billion next year.
Ifo is one of several economic research institutes that prepare twice-annual joint forecasts for the German government in the autumn and the spring.
The other institutes presented their own individual forecasts last week, which also forecast economic growth of between 0.2% and 0.4% this year, inflation of between 2.2% and 2.4%, and total unemployment of 2.7 million to 2.8 million.
The European Commission has forecast the overall economy across the entire European Union to grow by 1% this year.
The Bundesbank's most recent economic forecast from the beginning of June calls for German economic output to grow by 0.3% for the year as a whole.
In the medium term, the central bank's economists expect a slightly stronger increase of 1.1% in 2025 and 1.4% in 2026.
