Slight Dip

The seasonally-adjusted figure released by officials at the Federal Statistics Office on Tuesday came in well below the 0.5-percent growth in gross domestic product recorded in the first quarter.

Exports continued to provide most of the impetus, although there were also indications of growing domestic expenditure. Domestic investment in machines and equipment rose significantly, while construction declined.

"Economic growth was based especially on the highly dynamic foreign trade," the statistical office said, adding that domestic demand had made a "positive, though smaller contribution to growth."

Past the peak

Financial analysts said they were disappointed with the growth, adding that they had expected a slightly higher figure of 0.4 percent.

"A few weeks ago, we thought that it was going to be significantly stronger because of the good mood among companies and the labor market situation," Dirk Schumacher of Goldman Sachs told Reuters news service. He added that the dip should be seen as a slip-up and that growth would again pick up in the third quarter.

"But we've definitely surpassed the growth peak," he added.

Strong 2006

Revised figures for 2006 meanwhile indicated that the economy grew faster than previously announced, with growth for the full year coming in at 2.9 percent, against the 2.8 percent previously reported.

Government officials are forecasting growth of 2.3 percent in 2007.