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German business confidence drops

August 25, 2016

Confidence among German business leaders has slipped markedly, the latest monthly index of Germany's Ifo economic research institute has shown. Global uncertainties are finally taking their toll, experts say.


German business confidence made a steeper-than-expected fall in August, the Munich-based Ifo economic think tank reported Thursday.

Its closely watched monthly barometer dipped to 106.2 points from its July level of 108.3 points, showing the lowest reading since December 2014.

"The German economy has fallen into a summer slump," Ifo President Clemens Fuest said in a statement, noting that all sectors except construction had contributed to the drop in the August index.

Temporary effect?

The sharp decline contrasted with a negligible drop in July when business leaders surprised forecasters by appearing to shrug off anxiety over Britain's pro-Brexit vote.

German executives pessimistic about post-Brexit UK economy

"Rising global and geopolitical uncertainties have finally left a mark on German businesses," Nordea Bank economist Holger Sandte told Reuters.

"Nevertheless, we're confident the German economy will stay on a path of growth," KfW analyst Jörg Zeuner said, adding that he expected an expansion of 1.8 percent for the whole of 2016.

Ifo's headline figure is produced from two separate polls. Some 7,000 executives are asked about how they assess their current situation and, secondly, what their business expectations are for the next six months.

hg/sri (Reuters, AFP)

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