German business confidence deteriorated to the lowest level in more than a year in February, as concerns over the health of the global economy weighed, industry data showed on Tuesday.
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The Ifo institute’s business climate index dropped to 105.7 in February from 107.3 in January.
Investor confidence slid to its lowest level since October 2014, the ZEW Center for European Economic Research in Mannheim said last week.
But the score for expectations – how the economy will fare in the future – was a big miss to forecasts: just 98.8 against an expected 101.6.
Coming after Monday’s weak purchasing managers surveys for Germany and the eurozone, the Ifo survey indicates that an uncertain economic outlook and heightened financial-market volatility are leaving their mark on the German economy.
“The industrial sector fears that it will go through a downturn. Also, we expect that public consumption continues to provide a stimulus due to more spending on refugees”, he said.
The data from the Munich-based Ifo economic institute pushed the euro to three week lows against the dollar and deepened concerns about the strength of Europe’s largest economy.
“Expectations have taken another sharp hit from recent market turmoil, the adverse impact of low oil prices and renewed concerns about a slowing of the Chinese economy”, he said.
At the same time, the statistics office confirmed a preliminary estimate that the economy expanded by 0.3% in the fourth quarter of previous year, the same rate of growth as in the third quarter.
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“The story will remain the same for the rest of the year, with weaker foreign trade and stronger domestic demand because of higher state spending and consumption”.
