German business morale falls for third month running

The report noted that Germany’s net capital exports in fact hit new record in 2015, which rose to 8.3 percent of its annual economic output in the year, following 7.3 percent in 2014.

The German economy has suffered from a drop in demand from struggling emerging markets in Asia and Latin America.

The survey, which is based on monthly responses from around 7,000 firms in Germany, suggests that companies are concerned about the economic outlook for the next six months.

Manufacturers’ business expectations declined steeply, marking their largest downswing since November 2008.

The data released Tuesday bolsters the argument for the European Central Bank to expand its monetary stimulus efforts at its next meeting March 10.

German companies have been relying on a robust United States economy to offset falling exports to China, Brazil and other emerging markets.

At the same time, the statistics office confirmed a preliminary estimate that the economy expanded by 0.3% in the fourth quarter of previous year, the same rate of growth as in the third quarter. In January the German government revised down its own growth forecast for 2016 to 1.7 percent.

Natixis economist Johannes Gareis felt “there are reasons to believe that the first quarter of 2016 can see another round of rather solid domestic demand performance, while export growth is likely to be weak”. “Also, we expect that public consumption continues to provide a stimulus due to more spending on refugees”, he said. With the manufacturing sector plunging on the German business sentiment index, much more might be said especially in regard to the economy of Germany and its sluggish growth.

In December, Ifo had forecast that the German economy would grow by 1.9 percent this year.