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Sullen German entrepreneurs

August 25, 2014

German business leaders have become more pessimistic about the medium-term prospects of the domestic economy, according to a monthly survey by a leading economic think tank.

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German machine tools company
Image: picture-alliance/dpa

The Munich-based Ifo economic institute said Monday its barometer measuring German entrepreneurs' business mood continued its downward movement in August, marking the fourth monthly drop in a row.

The think tank's benchmark index fell to 106.3 points, down from 108 points a month earlier, Ifo reported.

"The German economy is continuing to lose momentum," Ifo President Hans-Werner Sinn said in a statement. He noted that business leaders were more pessimistic about economic developments in the six months ahead, and they expressed dissatisfaction at their current situation.

Who's to blame?

Analysts cited a number of geopolitical crises which in their view were increasingly taking their toll on Germany's strongly export-oriented economy.

"The fourth consecutive drop in the index also shows that Germany is in no position to decouple itself from ongoing problems in the eurozone at large," KfW Bank economist Jörg Zeuner told Reuters. "Disappointing growth rates in Europe are contributing to the dilemma."

Even in Europe's powerhouse, the economy contracted by 0.2 percent in the second quarter, with a strong comeback in the second half of the year still anything but a given.

hg/nz (dpa, Reuters)