* Euro zone Q1 growth seen at 0.5 percent
* Growth to be 0.4 percent for four quarters
* ECB to raise rates by 25 basis points per quarter
By Jonathan Cable
LONDON, April 14 (Reuters) - The euro zone economic recovery picked up pace last quarter, buoyed by a resurgent Germany, but the upturn is coming at a cost and the growth rate will ease over the remainder of 2011, a Reuters poll found on Thursday.
The 17-nation bloc's economy grew 0.5 percent in the first three months of the year, according to the poll of over 40 analysts taken in the past week and in line with a March survey.
The forecast for faster growth than the lacklustre 0.3 percent seen in the dying months of 2010 is supported by strong upward revisions to Germany's economic outlook and comes despite periphery economies continuing to struggle.
Economic growth is expected to slow to 0.4 percent per quarter until the current period next year when it will tick back up to 0.5 percent, in line with last month's outlook.
"Higher inflation and significant fiscal tightening will continue to constrain the recovery despite the resurgence in global manufacturing," said James Nixon at Societe Generale.
The European Central Bank upped interest rates by 25 basis points from their record low of 1.0 percent last week. It is seen making similar increases once per quarter through to September next year, with rates ending 2012 at 2.5 percent, in line with a poll taken after the rate hike.
"In a strong signal that the governing members of the ECB are more worried about the threat to inflation and less worried about the growth implications, the ECB began its tightening," said Bruce Kasman at JP Morgan.
Despite the expected rate rises, economists revised up their forecasts for inflation and now see prices rising 2.4 percent this year, up from a 2.2 percent prediction just last month, as booming oil, food and commodity prices weigh on minds.
The ECB targets inflation just below 2 percent.
Gross domestic product is expected to grow 1.7 percent this year and next, with the 2011 outlook unchanged from last month and the 2012 forecast revised down 10 basis points.
The euro zone's economic outlook compares to 1.5 and 2.2 percent growth seen for major trading partner Britain but pales compared to the 2.9 and 3.0 forecasts for growth in the United States.
Japan's economy is expected to contract in the current quarter after last month's devastating earthquake and tsunami but perk up again in July-September on reconstruction efforts, and the disaster will have little impact on Europe.
"Japan accounts for less than 1 percent of euro area exports. The trade effects are therefore likely to be fairly limited," Nixon said.
PERIPHERY PALLS
Service sector companies powered ahead in March at their fastest rate since August 2007 but there was a marked contrast between strength in France and Germany, Europe's largest economy, and weakness elsewhere.
The struggling periphery economies are facing weak domestic demand, hampered by austerity measures and political uncertainty that have heightened financial strife.
Portugal became the latest bloc member to ask for a bailout last week, following in the footsteps of Greece and Ireland, as months of resistance to foreign aid led to credit rating downgrades and a sharp rise in borrowing costs.
The poll gave a median 60 percent chance that Greece will restructure its debt in the next few years, but only a 30 percent chance that Portugal will the same. The poll found a 40 percent chance of an Irish restructuring.
Despite the slight economic downgrade, analysts revised down their unemployment forecasts for the euro zone, to 9.8 percent this year and 9.5 percent next. That compared with 9.9 and 9.6 percent forecasts in January and an actual figure of 9.9 percent in February. (Polling by Bangalore Polling Unit; Editing by Catherine Evans)