The finance ministry published forecasts of 1.3 percent growth for 2014 and two percent for 2015, raising earlier estimates of 1.2 percent for this year and 1.8 percent for next year.
It said it expected Spain's unemployment rate to ease to 24.2 percent this year and to 22.2 percent in 2015.
Currently at 24.47 percent, Spain's unemployment rate is the second highest in the eurozone after bailed-out Greece.
The ministry said it expected the country to create 622,000 jobs in 2014 and 2015, and 348,000 next year alone after six years of job destruction sparked by the collapse of a construction boom in 2008.
"This improvement comes despite a less favourable economic climate, particularly in the eurozone," it said in a statement.
"The recovery of the Spanish economy is strengthening, with higher growth than that of the countries in the single currency zone."
The government published the new forecasts after a cabinet meeting at which it approved the country's 2015 budget.
The forecasts come a day after the country's central bank published a report warning Spain was likely to see slower growth in the final months of 2014 on the back of lower consumer demand.
"For domestic consumption, opinion polls and retail indicators are, on average in July and August, below the levels that were seen in the second quarter," the report said.
The report also said job creation had been slower in the third quarter to date than in the first half of the year.
Spain clocked up 0.6 percent growth in the second quarter of 2014, it's fastest growth in six years as the country slowly emerges from its long economic crisis.