German Business Confidence Hits New Low

The euro zone's biggest economy, looked set for another year of below-par growth in 2005 as business confidence fell to its lowest level in a year and a half in April, a new poll showed Monday. The widely watched Ifo business climate index fell for the third consecutive month this month, sliding by 0.7 point to 93.3 points, its lowest level since September 2003. "While companies' assessment of their current situation is little changed, they're more pessimistic about the outlook for the next six months. This suggests that economic momentum is going to remain weak in the coming moths," Ifo president Hans-Werner Sinn said. For its monthly survey, Ifo polls around 7,000 companies about their assessment of current business and their expectations for the next six months. Germany's six leading economic research institutes are scheduled to publish their updated GDP growth forecasts on Tuesday. In their spring report, they are expected to reduce their 2005 growth forecast to around 1.0 percent from an earlier prediction of 1.5 percent. Already, the International Monetary Fund and the European Commission have slashed their German GDP growth forecast to just 0.8 percent this year.