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German economic growth slows more than expected in Q1

Germany's economic growth slowed more than expected in the first quarter as consumer spending rose at a modest pace and government expenditure fell.

GDP grew 0.3% in quarterly terms, down from 0.6% in the fourth quarter of 2017, provisional data from the Federal Statistical Office showed. Analysts had predicted growth of 0.4%.

While an increase in capital formation contributed to the expansion, a fall in government consumption spending for the first time in just under five years weighed on overall economic growth during the quarter. A weaker contribution from trade and a modest increase in household consumption also dragged growth.

On an annual basis, the German economy grew 2.3% in the first quarter, after price and calendar adjustments, following a year-over-year expansion of 2.9% in the fourth quarter.

But some of the factors weighing on growth could prove temporary, Capital Economics said.

"Construction output and consumer spending were probably hit by the bad weather in [the first quarter], while strikes and a flu outbreak dented industrial output," said Jennifer McKeown, Capital Economics' chief European economist, in a note.

"The economy will receive a boost from increased public spending on child benefits and pensions in the coming quarters ... In all, we still see German GDP rising by 2.5% this year as a whole and the renewed strength of the eurozone's largest economy will encourage the [European Central Bank] to signal this summer that asset purchases will not last into 2019."