Bundesbank predicts German, Europe's Largest Economic Growth

The Bundesbank said growth in the country would be boosted by both external and domestic demand.

Last week, Germany, Europe's largest economy, reported that its economy grew 0.4% in the three months to June.

However, the Bundesbank noted that the China's slowdown could add to uncertainty over growth prospects for the global economy.

"The risks of a stronger economic slowdown [in China] remains high," the bank said.

"The decision of the Chinese central bank to allow the yuan to depreciate against the US dollar can be seen as evidence of the uncertainty."

In its monthly report, the Bundesbank said that Germany would benefit from increases in real earnings domestically, as well as economic recovery in the eurozone.

Accelerating growth in the United States and Britain - two of Germany's key trading partners - would also contribute to Germany's growth.

"The conditions are currently in place for solid economic growth in the second half of 2015, fuelled by both external and domestic demand," the bank said.