“The economic upswing of last year has continued unabated,” the Statistics Office said in a statement, adding that the world’s third largest economy had proven itself “very robust” despite the strong euro dragging on exports and oil prices at record highs.

Economists polled by Thomson Financial News had expected gross domestic product (GDP) in Europe’s largest economy to have expanded by only 0.7 percent. In the fourth quarter it grew 0.3 percent.

Data since the beginning of the year have suggested that the German economy was holding up surprisingly well despite the strength of the euro, rising energy and food prices, the credit crunch and a slowing of the US economy.

Industrial output, for example, grew 2.3 percent in the first quarter, data showed earlier this month, while exports – the motor of the German economy – were up 2.4 percent.

“The result shows that Germany – with painful reforms in previous years – has become stronger and more resilient to external shocks than before,” Bank of America economist Holger Schmieding said.

“For an economy that we had described as the ‘sick man of Europe’ until it started to get its act together again with the Hartz I-IV and other structural reforms five years ago, this is quite an achievement,” Schmieding said.

The contrast with other euro zone countries could not be starker. First quarter from the EU’s Eurostat data agency showed Thursday showed that the French economy grew by a mere 0.6 percent and Spain’s just 0.3 percent.

Germans cannot afford to be too smug, however, with the latest data and sentiment indicators suggesting that Germany cannot escape the global headwinds howling around the global economy for much longer.

German industrial output and exports fell in March, for instance, and the last reading of the closely watched Ifo sentiment index showed a steeper-than-expected decline. The Economy Ministry expects growth for the whole of 2008 of 1.2 percent, while the country’s six leading economic institutes expect 1.4 percent.

afp/dpa