German business confidence rose for the fifth month in a row, a closely-watched survey showed Monday, March 26 though the road ahead for Europe's biggest economy may become more difficult in light of the ongoing debt crisis in Europe and elevated oil prices, AP reported.
The Ifo Institute said its main confidence index rose to 109.8 points from 109.6 in February.
Even though the rise was slightly higher than economists had predicted, Ifo president Hans-Werner Sinn signaled a note of caution, pointing out the increase was still quite small.
Germany's economy, traditionally powered by exports but helped lately by increasingly strong domestic demand, has been a bright spot over the past couple of years.
However, even Germany's not immune from the ripple effects of Europe's debt crisis. Its economy contracted by 0.2 percent in last year's fourth quarter though it grew by a solid 3 percent over 2011 as a whole.
The government is predicting only 0.7 percent growth this year, as the outlook for European output and global trade weakens.
"High oil prices, austerity measures in almost all other eurozone countries and the slowdown of the Chinese economy are eroding both domestic and external demand," ING economist Carsten Brzeski said. "The latest developments, both at the global and the eurozone level, show that the German economy might sometimes be an island of happiness but will clearly not remain an economic island."
Ifo's survey is based on monthly responses from some 7,000 company executives.
