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Ifo index rally pauses

March 25, 2014

Confidence among German business leaders has taken a hit from the Ukraine crisis and concerns about slower growth in China. A crucial indicator compiled by the Ifo institute has fallen for the first time in five months.

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Hans-Werner Sinn
Image: dapd

Ifo's business sentiment index had fallen from 111.3 points in February to 110.7 points in March, the Munich-based German research group said Tuesday.

The drop in the business climate barometer was the first in five months, ending a four-month streak of increasing optimism within the German business community.

"The crisis in emerging economies, coupled with developments in Crimea, are having an effect," Ifo President Hans-Werner Sinn said in a statement.

German economy set for bigger growth

The roughly 7,000 business leaders, interviewed by Ifo for its widely-watched indicator, were significantly more pessimistic about future business than last month. The relevant sub-index fell by a higher-than-expected two points to a total of 106.4 points.

Views on current business, however, brightened from a February reading of 114.4 points to 115.2 points in March, the survey showed.

Experts said they expected the slight decline in the general indicator to be preliminary, because the German economy was already in a process of recovery.

uhe/ng (dpa, Reuters, AFP)