Growth Question Mark Over Germany as Business Confidence Sags

22 March 2001

Businesses in Germany, Europe’s largest economy, are losing their confidence, according to the influential Ifo business climate index. The news follows yesterday’s revelation of an 8.8% February fall in the nation’s advertising expenditure [WAMN: 21-Mar-01].

The Ifo index for last month fell to 94.9 compared to 97.5 in January - further than expected and its lowest level since July 1999. Commented economist Rainer Guntermann of Dresdner Kleinwort Wasserstein: “The data clearly suggests that there is potential for a sharp slowdown in Germany around the corner.”

"It's very poor. It raises the chance of seeing a 50 basis point interest-rate cut from the ECB rather than 25 (basis points) when they eventually start moving," said another entrail-raker.

The Ifo index is based on a survey of 7,000 companies. Its data often highlights trends that could later extend throughout the German economy –a significant indicator for the euro currency area as a whole.

News source: BBC Online Business News (UK)