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German Business Confidence Drops, Firms Less Optimistic About Future

FRANKFURT AM MAIN (AFP) – German business confidence fell in January, a survey from the Munich-based Ifo institute showed Wednesday, with firms less optimistic about the future as the world faces increasing geopolitical uncertainty.

The Ifo business confidence index stood at 109.8 points in January, a fall of 1.2 points to its lowest level since the 109.5 reading in September.

Analysts surveyed by Factset had predicted a slight increase to 111.3 points.

“The German economy made a less confident start to the year,” Ifo president Clemens Fuest said in a statement.

“Companies expressed greater satisfaction with their current business situation, but are less optimistic about their six-month business outlook.”

The Ifo sub-index measuring present conditions inched up slightly, but the future expectations barometer slipped by more than two points, from 105.5 to 103.2.

Firms in all four sectors Ifo surveys — manufacturing, construction, wholesaling, and retail — reported lower confidence.

“Germany is getting increasingly concerned about the possible impact from US president Trump’s suggested trade sanctions,” wrote analyst Carsten Brzeski of ING Diba bank.

The US dislodged France as Germany’s biggest export customer for the first time in many years in 2016, he noted.

Combined with the threat to German exports from Brexit, Brzeski added, “the German economy will continue to be highly dependent on domestic demand” in the year ahead.

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