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Business confidence in Germany continued to decline

GERMANY (OBSERVATORY) –┬áBusiness confidence in Germany deteriorated for the fifth consecutive month in April, which is another sign that the largest economy in Europe is losing some momentum, Reuters reports.

The Munich Economic Institute Ifo said that its business climate index, which for the first time received data on the services sector, fell in April to 102.1 points from 103.3 points in March. The Reuters poll suggested a decrease to 102.7 points.

“A good mood among German companies has evaporated,” said the head of Ifo, Clemens F├╝st. “The German economy is slowing down.”

According to the survey, the level of business activity in the manufacturing industry deteriorated for the third month in a row, but nevertheless remained at a high level, which is now based on the responses of about 9 thousand firms.

In the services sector, the business climate index fell sharply, as managers were far less optimistic about the next six months.

The indicator of business morality in construction has reached a new record level, as firms benefit from the increased demand for real estate due to the growing population, record low loan costs, real wage increases and the solid labor market in Germany.

Ifo economist Klaus Wolrabet said that the figures point to the growth of gross domestic product (GDP) by 0.4% in the first quarter.

“The fifth consecutive fall is a sign of normalization, we are far from a recession,” Volrabet told Reuters.

The Ministry of Finance earlier warned that the growth may slow down slightly in the I quarter after an increase of 0.6% qoq in the last three months of 2017. The German government will update its own growth forecast on April 25.

The International Monetary Fund (IMF) last week increased its forecast for economic growth in Germany, forecasting an increase of 2.5% this year.