German business confidence index slides
Germany's business confidence index fell unexpectedly in February 2005 as rising unemployment impacted consumer spending and dampened prospects for a recovery after
Europe's largest economy contracted in the fourth quarter.
Munich-based research institute IFO said that
Germany's business confidence index fell to 95.5 in February 2005 from 96.4 in January 2005.
Germany's $2.7 trillion economy is struggling to grow as high unemployment continues to hurt domestic spending.
The country's economy grew 1.6% in 2004. However, economy contracted 0.2% during the last three months of 2004 as companies reduced investment in equipment and exports failed to make up the shortfall.
Exports helped the economy expand in the first half of 2004, but demand for exports took a hit as the value of the Euro reached record levels and made German products less competitive overseas.
Analysts say that the IFO figures and
Germany's continuing problems may delay an interest rate hike by the European Central Bank.