BERLIN, Nov 21 - German business executives probably grew more confident for a seventh consecutive month in November, although a stronger euro could hurt exporters and curb optimism in coming months, a poll showed on Friday. The influential Munich-based Ifo institute's index of business confidence, based on a monthly survey of about 7,000 companies, will likely climb to 95, the highest since February 2001, from 94.2 in October , a survey of 30 economists showed. Forecasts for the November index, to be released at 0900 GMT on Tuesday, ranged from 94 to 97.5. "The momentum is likely to slow when the renewed strengthening of the euro dampens export expectations," said Carmen Nuzzo, an economist at Citigroup in London.
Germany's fragile economic recovery may be hampered by the euro's recent rise to a record against the dollar, as a stronger common currency makes goods produced in the euro region more expensive for customers outside the 12-nation bloc. Germany, Europe's largest economy and the world's biggest exporter by value, relied on foreign demand to help it expand 0.2 percent in the third quarter, the first signs of growth since the same quarter a year earlier. Domestic demand suffered its largest fall for more than a decade in the July to September period. "Over the next few months we expect the euro to continue to climb and of course this could pose a threat to Germany's nascent recovery by hurting export growth," said Chris Gothard, a currency analyst at Brown Brothers Harriman in London. "We doubt that the euro's strength could fully unravel the recovery, but it makes the rebound more difficult."
Michael Rogowski, head of the BDI industry federation which represents companies including Volkswagen and Siemens, said this week he was extremely worried by the euro's strengthening and warned that the end of the currency's rise was not yet in sight. German Chancellor Gerhard Schroeder has said a stronger dollar would help Europe and the U.S. by spurring European exports and trimming American deficits. Schroeder hopes a package of early tax reductions will underpin growth next year, after Germany suffered its longest period of stagnation since World War Two. The government expects 2004 growth of about 1.7 percent. Adding to evidence of a cautious German recovery, the Bundesbank on Friday revised September industry output figures to show a monthly gain of 0.2 percent, compared with an originally reported decline of 1.2 percent. German Finance Minister Hans Eichel said on Friday prospects for the economy were very good because of accelerating global growth, though he said gross domestic product was likely to have shrunk slightly for the full year. The Ifo index touched a low of 80.2 in February 1993 during the recession of the early 1990s and reached a high of 107.6 in November 1990 after German reunification.//