* Exports to drive recovery, domestic demand also up in 2010
* Germany experiencing "small job miracle" -Bruederle
* Credit conditions still tough but crunch now improbable
(Adds quotes, details)
By Sarah Marsh
BERLIN, April 21 (Reuters) - The German economy will likely grow by 1.4 percent in 2010 and by 1.6 percent next year, driven by a rise in exports, the Economy Ministry said on Wednesday.
The ministry thereby confirmed its 2010 forecast from January and added that Europe's largest economy would likely grow 1.75 percent on average from 2012 to 2014.
"We believe the economy needs to warm up this year but will have more momentum next year," Economy Minister Rainer Bruederle told a news conference. "The recovery is becoming ever more self-sustainable, which is important, and support measures like fiscal stimulus packages are coming to an end."
Germany emerged from its deepest post-war recession in the second quarter of 2009 but the economy stalled over the following three months before being hit by harsh winter weather early this year.
Bruederle said the economy may have shrunk in the first quarter of 2010 due to the weather, which weighed especially on construction activity, but that growth would pick up later in the year.
The impact of the volcanic ash cloud on the economy would be limited, he added, because airspace was being reopened on Wednesday and the situation was normalising. [ID:nLDE63F11N]
Foreign demand is seen driving the recovery, the Ministry said in a statement that accompanied its growth forecasts, with exports seen rising 6.8 percent in 2010 and 7.2 percent in 2011.
"The pick up in the global economy is especially favouring German exports," Bruederle said.
Domestic demand was seen rising 0.4 percent this year and 0.8 percent in 2011. Private consumption is expected to fall 0.6 percent in 2010, before picking up by 0.6 percent next year.
The ministry said the number of unemployed would likely remain steady at around 3.4 million.
"We are observing a small job miracle," Bruederle said. "The overcapacity in labour due to the crisis was largely solved by an adjustment to working hours rather than job cuts."
German joblessness has been largely kept in check during the global downturn by government subsidies that encourage firms to shift employees to part-time work rather than fire them, but economists had feared unemployment would rise sharply this year.
"The German labour market has become an international example," said Bruederle.
German unemployment fell unexpectedly in March, posting its biggest drop since June 2008. [ID:nLDE62U0QC]
On credit, Bruederle said financing conditions were still difficult for many companies, but the danger of a broad crunch was falling: "a drastic restriction of credit provision no longer seems probable".
For a table with the Economy Ministry's latest forecasts, please double click on [ID:nBAE003768]