Como se combate o populismo? "Com eleições", responde Fukuyama

[AC]

Business confidence in Germany, Europe's largest economy, fell to a 19-month low in April as surging oil prices dimmed the outlook for economic growth.

The Ifo institute in Munich said today its index fell to 93.3, the third drop in a row, from 94 in March. Ifo says three consecutive declines signal slowing economic growth. The decrease was led by business expectations, with a sub-index dropping to 93.6, the lowest since June 2003, from 94.6.

Slumping executive confidence reflects concern that the economy is stalling, held back by oil prices above $50 a barrel and the highest unemployment since World War II. Companies such as SAP AG, the world's largest maker of business-management software, have had to rely on the U.S. and Asia to boost sales.

``Oil was definitely the main factor, as well as weak domestic demand,'' said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt. For the German economy, ``we forecast 0.2 percent growth in the second quarter after 0.5 percent in the first quarter, but the risk of zero growth has increased.''

The price of a barrel of Brent crude surged to a record $57.65 in London futures trading on April 4 and is now 65 percent more expensive than a year ago. Higher energy costs contributed to a 3 percent drop in the country's benchmark DAX index this month. The DAX fell 0.3 percent today to 4212.28.

The euro fell after the report. The euro dropped to $1.2979 at 12:09 p.m. in Frankfurt from $1.3064 late on April 22 in New York, according to electronic currency-dealing system EBS.

`Continue to Be Weak'

Economists expected an Ifo reading of 93.5, the median of 48 forecasts in a Bloomberg survey showed. An index measuring executives' current assessment also declined, to 93.1 from 93.3.

``This is an indication that economic growth will continue to be weak in the coming months,'' Ifo President Hans-Werner Sinn said in a statement.

The European Commission on April 4 slashed its forecast for German expansion this year to 0.8 percent from 1.5 percent, which would make Germany the laggard of the 12-country euro region. Germany's six leading economic institutes may pare their 1.5 percent estimate tomorrow.

Germany ``is not growing to the extent that we had hoped it would,'' Leif Johansson, chief executive officer of Volvo AB, Europe's largest truckmaker, said at a news conference in Stockholm today.

By contrast, the U.S. economy will probably expand 3.8 percent in 2005, according to the median forecast of 64 economists in a Bloomberg survey from April 8. The commission expects the euro region to expand 1.6 percent this year.

No Jobs

Walldorf, Germany-based SAP, whose software helps clients manage tasks such as tracking inventory, said April 21 that software-licensing revenue in the U.S. and Japan had to make up for a decline in sales in its home market.

Germany has dragged down growth in the euro area for nearly a decade, allowing companies such as Robert Bosch GmbH and DaimlerChrysler AG to win wage concessions from workers to keep down costs. By threatening to move production abroad, companies kept a lid on wages. Hourly earnings in Germany rose at half the rate in the U.K. last year, according to the Organization for Economic Cooperation and Development in Paris.

The jobless rate rose to a record 12 percent in March, making consumers even more reluctant to go shopping. Household spending, the largest part of the economy, hasn't risen for three years.

Schroeder's Woes

German Chancellor Gerhard Schroeder's government may cut its economic growth forecast for this year when it publishes an updated projection on Friday. The government is currently predicting expansion of 1.7 percent in 2005.

Schroeder's Social Democratic Party may lose control of Germany's most populous state, North-Rhine Westphalia, in next month's regional election for the first time in nearly four decades, a survey by polling company Emnid showed on April 22.

There are some signs that consumption may be turning around. Consumer confidence rose for a seventh month in March on pent-up demand for goods like furniture and refrigerators, according to GfK market researchers. Domestic manufacturing orders for consumer goods rose for a fifth month in February.

``It looks like consumers' purchasing appetite is pent up,'' Gernot Nerb, an economist at the Ifo economic institute in Munich, said in an interview. ``So if things improve I think consumer spending will pick up.''

Today's report showed sentiment improving among retailers and builders. Indexes measuring confidence in the wholesale and manufacturing industries declined, Ifo said.

Global Cooling

Even an improvement in consumption may not be enough to keep expansion from slowing this year since demand for exports, which led Germany's return to growth last year, is set to cool. World growth will slow cool to 4.3 percent this year from 5.1 percent in 2004, the International Monetary Fund said April 13.

``There has been a certain clouding over of prospects'' for growth in Germany and the euro region, Axel Weber, Bundesbank President and rate-setting member of the European Central Bank council, said April 21. ``I don't see the recovery at risk, but I see a moderate pace of recovery at a very low level.''

Investors in Germany become less optimistic for the first time in six months in April, the ZEW institute said April 19. They also lowered expectations for the ECB to raise its interest rate this year. The bank has kept its benchmark interest rate at a six- decade low 2 percent for nearly two years.

The implied rate on the December Euribor futures contract was at 2.25 percent today, compared with 2.59 percent on March 23. The contracts settle to the three-month euro area inter-bank offered rate for the euro, which has averaged 15 basis points more than the ECB's key rate since the currency's launch in 1999.