Fears over German economic growth after sharp drop in business confidence

Chris Papadopoullos
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German Economy Showing Signs Of Recovery
Manufacturers' business expectations fell at their steepest rate since 2008 (Source: Getty)

German sentiment on the economy has taken a sharp tumble to its lowest value for over a year, data released this morning reveals.

The IFO business climate index for German industry and trade dropped to a score of 105.7 in February from January's 107.3. It is the lowest score since December 2013.

The index was dragged down by a steep fall in manufacturers' business expectations, which suffered its largest monthly fall since November 2008.

"Expectations fell very sharply and are now at their lowest level since December 2012, when Germany last dipped into recession," said economist Jennifer McKeown from Capital Economics.

"The latest data support our long-held view that the German recovery will slow this year. We expect annual growth of about 1% to follow last year’s 1.4 per cent rise, but a further decline in the survey indicators would pose a downside risk to even our below consensus forecast."

The German economy grew by 0.3 per cent over the final three months of 2015, official figures from Destatis showed this morning.

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