German economy struggles to grow

Container terminals are getting busier as Germany's export-led economy picks up

BERLIN, Germany (CNN) -- The German economy, the biggest in Europe, edged back into growth in the first three months of this year, clawing its way out of recession.

First-quarter gross domestic product grew 0.2 percent after contracting by 0.3 percent in the final quarter of last year, the Federal Office of Statistics said on Thursday. Analysts polled by Reuters had expected quarterly growth of 0.1 percent.

Official conformation that the economy grew came as little surprise after the Bundesbank estimated the economy grew about 0.25 percent in the first three months of 2002.

But analysts said the numbers did not indicate the economy was on the mend.

"Exports were especially strong, which is a sign of the economic upswing in the United States. Domestic demand is still weak, there is a strong drop in capital goods investment, which should change in coming months because of strong sentiment," Christoph Hausen, economist of Commerzbank, told Reuters.

"This might well be in line with the European Central Banks expectations that the economic trough was reached in the fourth quarter of 2001 and a gradual recovery is starting in the first quarter."

Germany slipped into recession late last year, along with the United States and Japan, as the global downturn and the impact of the September 11 attacks in the U.S. slowed demand.

Economists now expect the German economy to grow by 0.9 percent for all of this year and by 2.4 percent in 2003.

The German Finance Ministry said on Thursday it expected economic growth to accelerate considerably during the course of 2002 but the upturn would not have an impact on the unemployment level until the second half.