Business optimism in Germany falls for 5th month in row

PanARMENIAN.Net - Business optimism in Germany fell for the fifth month in a row, a closely-watched survey showed Monday, Sept 24, in another sign that Europe's debt crisis is weighing heavy on the continent's largest economy, The Associated Press reports.

The Ifo index dipped to 101.4 in September from 102.3 in August. The consensus in the markets was for a flat reading.

Germany's government is in relatively good financial shape and its economy has performed strongly over the past couple of years despite rising debt problems across the 17-country eurozone.

However, Germany's main export partners are its euro partners and the troubles elsewhere are worrying businesses and consumers in Germany. Growth is stalling and recession fears are mounting.

In recent weeks, concerns over Europe's debt crisis have eased after the European Central Bank president Mario Draghi announced a plan to buy government bonds of indebted countries, such as Spain and Italy, if they agree to take steps to reduce their deficit.

But while those concerns about a financial disaster have eased, growth prospects for the currency union remain weak. Governments are cutting spending, withdrawing stimulus from their economies and sending unemployment higher. Meanwhile businesses in the indebted countries face higher costs for the credit they would need to invest and expand.

"Today's Ifo index shows that German companies remain skeptical about the economic impact of Mario Draghi's magic," ING analyst Carsten Brzeski said.

"Despite fears of a looming eurozone break-up clearly fading away, German businesses are downscaling their expectations. The structural adjustments in Germany's eurozone trading partners will take time and will dampen demand for German products."