Ifo economist: German economy could contract in fourth quarter

BERLIN Fri Nov 23, 2012 4:33am EST

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BERLIN Nov 23 (Reuters) - German growth will slow further in the fourth quarter of this year and the economy could even end the year with a contraction, Ifo economist Klaus Wohlrabe told Reuters on Friday.

"It will be even weaker (than in the third quarter). Companies won't feel the effects of the slight improvement in the Ifo index until the first quarter of 2013. It will be around zero and it could even slip into negative territory," he said.

Growth slowed to 0.2 percent in the third quarter from 0.3 percent in the second, data showed on Friday.

The Munich-based Ifo's survey of business sentiment showed an unexpected rise in November, breaking a six-month run of declines, as companies in Europe's powerhouse economy turned slightly more optimistic about their current business and expectations despite the euro zone crisis.

But Wohlrabe said this did not represent a turning point and companies continued to postpone investments as uncertainty remains.

He said export expectations had improved and both the order situation and demand were stabilising, especially as shipments to China and the United States were are going well.

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