BERLIN (Reuters) - Domestic demand was the main driver of German growth in the first quarter but foreign trade, which has propelled Europe's largest economy for much of the past decade, was a drag, data showed on Friday.
Seasonally-adjusted data from the Federal Statistics Office confirmed an earlier flash estimate showing that economic growth slowed to 0.3 percent on the quarter between January and March from 0.7 percent at the end of 2014.
That was weaker than in neighbouring France, where the economy expanded by 0.6 percent on the quarter, and also disappointed compared with the euro zone as a whole, where gross domestic product (GDP) growth picked up to 0.4 percent.
But economists remained upbeat.
"Today's GDP data confirms the ongoing solid performance of the euro zone's largest economy," said Carsten Brzeski, senior economist at ING.
"Even if the growth numbers were weaker than in other euro zone countries, and some neighbours in the West, it is worth remembering that there still is an enormous difference between Germany and the rest of the euro zone when it comes to absolute levels, not growth rates."
A detailed breakdown of GDP data showed private consumption rose by 0.6 percent quarter-on-quarter while gross capital investment climbed by 1.5 percent, its strongest increase in a year.
Domestic demand contributed 0.5 percentage points to GDP growth while foreign trade subtracted 0.2 percentage points as imports rose almost twice as strongly as exports.
Gross capital investment, which weighed on growth in mid-2014, added 0.3 percentage points.
The economy ministry has said the economy will likely keep growing at a moderate pace thanks to solid domestic demand while foreign trade would likely make a positive contribution to GDP growth in the spring as a weaker euro improved the competitiveness of German goods and services.
Conditions for consumers do provide grounds for optimism - shoppers are feeling more upbeat than at any point since early 2001 as they benefit from a robust labour market, rising wages, low inflation and cheap oil.
On Friday the finance ministry said a favourable business environment should support Germany's economic upswing for the remainder of this year despite surveys this week showing investor sentiment deteriorating and private sector expansion slowing for a second consecutive month.
The German economy pulled off 1.6 percent growth in 2014 despite flirting with recession in the middle of the year and the government is expecting it to grow by 1.8 percent this year.