Analysts say much now depends on German consumer confidence

Official figures showed growth was led by construction, consumer spending and industrial investment.

The economy grew by 0.7% in the quarter itself, up from growth of just 0.3% in the previous quarter.

Analysts welcomed the data, but warned that higher oil prices and the strong euro could hit future growth.

"2008 will depend on consumers, as we see pressures from the foreign trade side, from oil and the exchange rates," said West LB economist Joerg Lueschow.

"How strongly the economy weakens depends on consumers."

Earlier this week, the euro hit a record high against the dollar, which makes German exports more expensive in the US.

German firms are also having to cope with higher global oil prices, which are closing in on $100 a barrel.