German retail association HDE raised its sales forecast for 2014 on Tuesday, and expected German consumers to spend more in the coming Christmas season than in last year.
Retail sales in 2014 would grow by 1.8 percent, instead of the 1.5 percent as previously expected, to 459 billion euros (about 570 billion U.S. dollars), said HDE in a statement, referring to stable labor market which boosted consumer sentiment.
"The economic conditions are right," said HDE President Josef Sanktjohanser.
For the November-December Christmas season, when sales were traditionally 15 percent above annual average, HDE expected sales to be 1.2 percent higher than the same period of last year, and reach a total volume of 85 billion euros.
HDE said it found in a recent survey that German consumers were willing to spend around 447 euros on Christmas gifts, 50 euros more than in 2013.
Private consumption was regarded as the main pillar supporting the growth of the German economy, as exports and investment be hit by weak global growth and geopolitical tensions in Ukraine and the Middle East.
Domestic demands, fueled by stable labor market, rising wages, moderate inflation and low interest rate, remained robust.
The outlook for the overall economy, however, was gloomy.
The German government, as well as leading economic institutes, the International Monetary Fund and the European Union have all cut their forecast for growth in Europe's biggest economy.
Official data on gross domestic product (GDP) in the third quarter was scheduled to be released on Thursday. Economists feared that the GDP would continue to shrank following a contraction of 0.2 percent in the second quarter and a strong growth of 0.7 percent at the start of this year.
Deutsche Bundesbank, the central bank of Germany, said earlier that it forecasted the German economy to improve only slightly, if not stagnate, at the rest of 2014. (1 euro = 1.25 U.S. dollars)