Frankfurt, May 19 (Bloomberg) -- Germany's economy barely grew in the first quarter after shrinking in the second half of last year as rising unemployment eroded consumer spending, economists said ahead of a report on Tuesday. Gross domestic product expanded 0.1 percent from the final quarter in 2001 and shrank 0.3 percent from a year ago, according to the median forecast of 23 analysts surveyed by Bloomberg News. Demand from abroad is helping Europe's largest economy to grow again. Exports, which account for about a third of Germany's economy, rose in the three months through March. In the same period, retail sales declined 3.8 percent from a year ago. ``We're having difficulties,'' said Ralf Bufe, chief executive officer of building-materials maker Pfleiderer AG. ``Our foreign business is excellent, domestic demand is still weak.'' The DIW economic institute said it expects the economy to have contracted last quarter, as companies pared investment and the number of German jobless increased in 14 out of the past 16 months. MAN AG, Germany's second-biggest truckmaker, posted an unexpected first-quarter loss on Friday. Still, Chief Executive Officer Rudolf Rupprecht said rising April sales and orders ``strengthen our hope that we've reached the trough.'' The Bundesbank will release a first quarter growth estimate on Tuesday. The bank's chief economist, Hermann Remsperger, said on Friday the economy grew ``slightly.'' Economics Minister Werner Mueller told Focus magazine it expanded 0.1 percent.

Trailing Europe
Germany is trailing the rest of Europe. The economy of the dozen nations sharing the euro grew as much as 0.5 percent last quarter, the European Commission estimates. The French economy probably expanded 0.4 percent, economists surveyed by Bloomberg News expect a report on Friday to show. A recovery in Europe may be stifled if the European Central Bank is too quick to raise its benchmark rate from 3.25 percent, the level it's been at for six months. The bank has said it's worried higher wages and rising oil prices may boost inflation. Inflation has been at or above the ECB's 2 percent limit for 23 months. President Wim Duisenberg said on Thursday he was ``less than entirely satisfied'' with recent inflation figures. The inflation rate in the dozen nations sharing the euro declined to 2.4 percent in April from 2.5 percent in March, less than analysts' expectations for a decline to 2.2 percent. Investors expect a rate increase as early as next month, interest rate futures trading shows. The yield on the three-month Euribor contract for June delivery rose 2 basis points to 3.62 percent on Friday, 37 basis points above the ECB's main lending rate. A basis point is 0.01 percentage point. Finance Minister Hans Eichel on Thursday said the government will maintain its forecast for 0.75 percent growth this year, up from 0.6 percent in 2001. ``Everybody is waiting for signals that the economic upturn has begun,'' said Volker Nitsch, an economist at Bankgesellschaft Berlin.