German business sentiment worsened slightly this month, largely in line with expectations, a closely watched survey showed yesterday, adding to signs that growth in Europe’s largest economy may be near its peak.
The Munich-based Ifo think tank said its business climate index fell to 110.4 — its second consecutive monthly drop — putting it a tick lower than a median forecast made by economists in a Reuters poll.
That remained close to recent long-term highs and followed new forecasts from the finance ministry which showed German economic growth doubled in the first quarter, but it was also in line with other reports that have shown Germany’s economic expansion, while robust, is likely to ease in the second quarter.
“In face of the high oil prices, the Japanese crisis and other risks, it was to be expected that companies would not have quite such a rosy outlook anymore,” Ralph Solveen of Commerzbank said. “The peak of the economic cycle will pass us by in the next few months.”
Europe’s largest economy has recovered faster than expected from its deepest recession since World War II and economic indicators show it is on a firm growth path. In contrast with the depressed economic picture in other parts of Europe, German businesses are still facing robust prospects abroad.
Just last week, Berlin raised its official growth forecast for this year, saying rising spending by consumers less worried about losing their jobs had marked a turning point that had put economic expansion on a strong footing.
The government earlier this month raised its forecast for growth this year to 2.6 percent compared with an earlier expectations of 2.3 percent, also forecasting the number of Germans in work would hit a record next year.
Earlier yesterday, the finance ministry said the economy probably expanded by 0.75 percent in the first quarter of this year, up from 0.4 percent in the previous quarter.
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