Debt crisis knocks German confidence
Source: Agencies |
July 23, 2011, Saturday
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Print Edition
Print Edition
GERMAN business confidence declined more than expected this month amid jitters over Europe's debt crisis, according to a survey published yesterday.
The Ifo Institute's confidence index dropped to 112.9 points for July, from 114.5 in June. While the index remains in sight of the multi-year highs it reached in recent months, economists had expected a slip of less than a point.
Ifo said companies' assessment of both their current situation and the outlook for the next six months declined.
Manufacturers expect slower export growth, and the climate also darkened in the retail sector, Ifo said. But "even though business expectations are weakening, the German economy is still enjoying pleasant summer days," it added.
Germany, Europe's biggest economy, is on course for a second consecutive year of strong economic growth as an export boom is accompanied by signs of increasing domestic demand. Its economy has not yet been affected by the debt woes afflicting several other eurozone countries.
German output grew by 3.6 percent last year, and Chancellor Angela Merkel said a similar increase is expected this year. "Germany has left the crisis behind it and is in a better position than it was," she said.
However, ING economist Carsten Brzeski said Ifo's findings suggest the eurozone debt crisis is worrying German businesses.
"Strong economic fundamentals and some positive side-effects from the sovereign debt crisis - lower interest rates and weaker currency - have shielded the German economy from the global soft patch and market turmoil for a long while. This shield is getting thinner," he said.
The Ifo Institute's confidence index dropped to 112.9 points for July, from 114.5 in June. While the index remains in sight of the multi-year highs it reached in recent months, economists had expected a slip of less than a point.
Ifo said companies' assessment of both their current situation and the outlook for the next six months declined.
Manufacturers expect slower export growth, and the climate also darkened in the retail sector, Ifo said. But "even though business expectations are weakening, the German economy is still enjoying pleasant summer days," it added.
Germany, Europe's biggest economy, is on course for a second consecutive year of strong economic growth as an export boom is accompanied by signs of increasing domestic demand. Its economy has not yet been affected by the debt woes afflicting several other eurozone countries.
German output grew by 3.6 percent last year, and Chancellor Angela Merkel said a similar increase is expected this year. "Germany has left the crisis behind it and is in a better position than it was," she said.
However, ING economist Carsten Brzeski said Ifo's findings suggest the eurozone debt crisis is worrying German businesses.
"Strong economic fundamentals and some positive side-effects from the sovereign debt crisis - lower interest rates and weaker currency - have shielded the German economy from the global soft patch and market turmoil for a long while. This shield is getting thinner," he said.
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