RPT-Domestic demand likely drove Q1 German growth-Buba

BERLIN (Reuters) - A likely acceleration in German growth in the first quarter was probably driven by domestic demand, though private consumption remained moderate, the Bundesbank said on Monday.

Bundesbank President Axel Weber said last week German gross domestic product (GDP) had likely expanded by around 0.75 percent in the first three months of this year. In the final quarter of 2007, Europe's largest economy grew by 0.3 percent.

In its latest monthly report, the Bundesbank said investment had helped to fuel growth in the first three months of 2008, as had construction activity during a mild winter.

"By contrast, consumer spending among private households remained restrained, despite continuing advances in the labour market," the Bundesbank said.

While exports showed renewed growth in the first quarter, imports also rose significantly, the central bank added.

"Including the likely replenishment in companies' inventories, overall growth in the first quarter was therefore primarily fuelled by domestic demand," it added.

Separately, a leading business lobby said the German economy was still on track to see robust growth this year.

A number of the country's leading think tanks have recently cut their growth forecasts to figures as low as 1.3 percent.

However, Juergen Thumann, head of the BDI industry federation, said two percent growth was "still reachable."