The German economy grew in the first quarter, in line with expectations, despite difficult economic conditions caused by the war in Ukraine and the pandemic, data showed today.

Europe's largest economy grew by 0.2% quarter on quarter and by 3.8% on the year, adjusted for price and calendar effects, the Federal Statistics Office said.

A Reuters poll had forecast growth of 0.2% and 3.7%, respectively.

The first-quarter growth meant Germany avoided a recession, defined as two quarters in a row of contraction, after gross domestic product (GDP) fell by 0.3% at the end of 2021.

"Despite the difficult global economic conditions, the German economy started the year 2022 with slight growth," said Georg Thiel, president of the statistics office.

While household and government spending remained mostly at the same level as in the previous quarter and exports were down at the start of the year, investments helped boost the economy.

Construction investments, boosted by mild weather, were up 4.6% from the previous quarter, despite price increases, and machinery and equipment investments also saw a rise, of 2.5%.

The German government in its spring forecast said that it expects overall economic growth in 2022 of 2.2%.

Meanwhile, German consumer morale is projected to inch up in June after falling to a record low in May, but high inflation and the war in Ukraine continue to weigh on household spending, a survey showed today.

The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, rose slightly to -26 points heading into June after hitting a revised all-time low of -26.6 points in May.

The latest reading, based on a May 5-16 survey, was in line with analysts' expectations, according to a Reuters poll.

"The consumer climate may have improved slightly, but consumer sentiment is still at an absolute low," GfK consumer expert Rolf Buerkl said in a statement.

"Despite further easing of coronavirus-related restrictions, the Ukraine war and above all the high inflation are weighing heavily on the mood of consumers," he added.

The institute said that to see a sustainable reverse in the downward trend, the conflict would need to be brought to an end via successful peace talks and the inflation rate must be noticeably slowed down with the help of the European Central Bank.

Late last month, Germany's economy ministry cut its economic growth forecast for 2022 to 2.2% from 3.6% and predicted that inflation this year would reach 6.1%.

The consumer climate indicator forecasts the development of real private consumption in the following month.

An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same time a year earlier.

According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.

The "willingness to buy" indicator represents the balance between positive and negative responses to the question: "Do you think now is a good time to buy major items?"

The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.

The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.