German business confidence has fallen for the fourth month in a row.
Optimism is dipping amid growing concerns about a slower European recovery, as well as due to turmoil in the Middle East and Ukraine.
The Ifo institute said Monday its closely watched business confidence index dropped to 106.3 points in August, down from 108 points in July—market analysts had expected a dip to 107.
Germany’s economy contracted by 0.2% in the second quarter of 2014, as construction activity migrated to the first quarter since there was an unusually mild winter. The contraction contributed to a flat reading for the overall Eurozone economy.
Also, the poll of some 7,000 companies showed a drop in both their assessment of their current situation and also their future expectations.
Doubts about the future include: whether the 18 countries that use the euro will resume their modest recovery, and whether concerns will continue to grow over the effect of the crises in Ukraine and the Middle East on Germany (the country’s economy is dependent on global trade).
Still, most analysts expect Germany to return to growth in coming quarters. Economist Carsten Brzeski at ING said companies’ assessment of their current situations remains relatively high, which “giv[es] hope that the third quarter could see a rebound of economic growth.”