German business confidence posts surprise drop | Business| Economy and finance news from a German perspective | DW | 22.03.2013
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Business

German business confidence posts surprise drop

A long spell of boosted business confidence in Germany has come to end. A closely-watched barometer by a leading economic think tank showed there was renewed unease about the prospects of eurozone recovery.

German business confidence posted a surprise drop in March, the Munich-based Ifo economic institute reported Friday.

It said its index measuring the mood in German boardrooms slumped to 106.7 points this month, down from a February reading of 107.4 points. The decline ended four consecutive monthly gains in the barometer.

Ifo President Hans-Werner Sinn said there was no need to panic.

"The German economy is holding its own with a good domestic performance in a difficult environment," he said in a statement.

Volatile environment

The survey of 7,000 executives saw a drop in both of its indices, gauging managers' business expectations and highlighting the assessment of their current situation respectively.

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Eurozone woes continue

The dent in business confidence was attributed first and foremost to new problems in the debt-stricken eurozone, including Italy's inconclusive election and drawn-out endeavors to save Cyprus from looming bankruptcy.

"If Cyprus were to go bust, you can expect a deterioration of the eurozone crisis which would negatively impact German exports," Deutsche Bank economist Oliver Rakau told the Reuters news agency.

The German economy had gotten off to a surprisingly slow start in the new year. Industrial orders dipped by 1.9 percent in January as demand in crisis-stricken southern European nations took another blow.

hg/pfd (dpa, Reuters, AFP)

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