BERLIN (Reuters) - The German government forecasts its economic growth will accelerate to 2.0 per cent in 2015 after gross domestic product expands by a projected 1.8 per cent this year, according to an internal report for the European Commission obtained by Reuters.

"The German government expects a real increase in gross domestic product of 2.0 per cent for the year 2015 and thus further strong growth," the government's report for the European Commission reads.

For the period 2016 to 2018 the government expects an average real growth of about 1.5 per cent per year.

"The positive developments in the labour market will continue during the period," reads the report, which Chancellor Angela Merkel's cabinet is expected to endorse later on Tuesday.

On Feb 12, the government forecast growth of 1.8 per cent in 2014, a slight upward revision of its previous 1.7 per cent growth target. That followed and expansion of just 0.4 per cent in 2013.

The new report adds that 2014 had started well.

"The early indicators are drawing a positive picture for the year 2014," according to the 46-page report, which is presented annually in Brussels to the member nations of the euro zone.

It said the mood has especially improved among companies and consumers.

"Taken all together, the economic data as well as the improving worldwide economic environment are signalling the economic recovery is turning into a more broad-based upturn this year," the report said.

The German government also confirmed its fiscal targets in the report. For 2015 it expects a balanced budget without any new net borrowing for the first time since 1969.

The government's goal is to reduce its total debt to below 60 per cent of the GDP level within 10 years. It aims to reduce the debt pile from the current 80 per cent of GDP to 70 per cent by 2017.