German economic growth is expected to increase considerably in the second quarter thanks in part to an "immense" pick-up in construction activity, Ifo economist Klaus Wohlrabe told Reuters on Friday.

He added that the recent 25 basis point interest rate cut by the European Central Bank to a historic low of 0.50 percent has had only a psychological effect in Germany, if at all.

Earlier, the Munich-based Ifo think tank's business climate index for May improved to 105.7 from 104.4 in April, while the German statistics office confirmed that gross domestic product rose by a tepid 0.1 percent in the first quarter over the three months to December.

Construction activity in the first quarter fell 2.1 percent.

(Reporting by Joern Poltz; Writing by Christiaan Hetzner; Editing by Kim Coghill)