Activity in the German economy should grow by 1.8 percent in 2015, rather than 1.3 percent as previously predicted, DIHK said.
But they argue that the improved figures were mostly due to one-off effects including low oil prices and interest rates and the weakness of the Euro against other currencies.
“This is a doped and borrowed upturn,” DIHK boss Martin Wannsleben said in Berlin.
The Euro's weakness against the US dollar has added around one percent to growth by making German products cheaper outside the eurozone.
And cheap oil has boosted growth by an estimated 0.7 percent, while low interest rates have made life easier for the construction and housing sectors.
Wansleben said those effects were masking a lack of competitiveness in the German economy.
Current good times are being sustained by shopping-happy consumers, who feel increasingly secure thanks to the good economic news.
But there is a strong possibility that growth might fall back below 0.5 percent.
“For every peak, there's always a trough,” Wansleben said. “Then we'll be rubbing our eyes.”
He targeted the government for special criticism, saying that special measures such as the introduction of the minimum wage couldn't be repeated or Germany would tempt fewer foreign investors in the future.
An expected 250,000 more people employed this year over last year was “a bit disappointing,” DIHK chief economist Alexander Schumann said.
A DIHK survey of more than 23,000 companies showed that managers remain optimistic, with plans to invest more and hire more people.
Meanwhile, the Institute for Economic Research (DIW) released projections of 0.5 percent GDP growth in the second quarter of this year, an increase over the 0.3 percent gain between January and March.