(RTTNews) - The weaker than expected business confidence data indicates that Germany's economic growth has faltered, said Jennifer McKeown, senior European economist at Capital Economics, on Wednesday.
The performance of the expectations sub-index, which dropped below its long-run average, suggests that the annual GDP growth is set to fall to about 1.5 percent from second quarter's 2.7 percent. The GDP is expected to decline to 1 percent next year from 3 percent this year, the economist said.
According to the McKeown, German households are in a cautious mode amid weakening exports and the threat of more bail-outs in the Eurozone periphery. With smaller economies stuck in recession, Germany's performance will barely be enough to keep the euro-zone expanding, she added.
Latest data from Ifo showed today that the business confidence index dropped at a faster than expected pace to 108.7 in August from 112.9 percent in July, but remained above the long-run average of 101.
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