Ifo: German business confidence falls for third straight month

| September 26, 2011
”Ifo:

The Munich-based Ifo think tank has today revealed confidence among German firms fell for the third consecutive month in September.

The closely-watched Business Climate Index dipped to 107.5 this month from August’s reading of 108.7 – this represented the lowest level since June 2010.

However, the fall was not as bad as the 106.5 economists had expected.

The fall was attributed to the ongoing debt crisis in the euro zone which could impact on the wider economy.

Ifo surveys around 7,000 German manufacturing, construction, wholesale and retail companies each month.

Commenting on the data, Ifo President Hans-Werner Sinn said: “The business expectations for the coming half year once more deteriorated markedly.”

However, one analyst said the figures suggest that Germany will not fall into a recession.

Meanwhile, a sub-index on expectations also edged lower to 117.9 from 118.1 in August – but again this was less than forecast.

Germany, which has been regarded as Europe’s powerhouse, has been driving the recovery of the euro zone but a recent slew of weak data has forced many to re-evaluate its assessment of the economy.

Statistics office Destatis recently revealed German exports fell more than expected in July.

According to Destatis, exports fell by 1.8% in July on a monthly basis compared with a 1.2% drop in June. Economists had forecast a 0.1% fall for the month.

The sharp fall in exports will be of grave concern for the country’s Government. Export demand helped to bring Germany out of recession in the second quarter of 2009 – much sooner than many of its counterparts throughout the world.

Last week, the European Commission slashed its growth forecasts for the euro zone and warned that the 17-member nation may come “close to standstill at year-end.”

Furthermore, the Washington-based International Monetary Fund recently lowered its growth forecasts for both Germany and the euro zone this year and next.

It expects Germany’s economy to grow 2.7% this year and 1.3% in 2012.

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