GERMAN business morale rose in August, but the exports that drove a second-quarter expansion may falter later this year if China’s slowdown hits Europe’s largest economy, the Ifo economic institute said.

    Munich-based Ifo said Tuesday its business climate index, based on a monthly survey of some 7,000 companies, edged up to 108.3 in August from 108 in July. The reading was the strongest since May.

    The sentiment reading exceeded the Reuters consensus forecast of 107.7 and came soon after official figures showed rising exports outstripped gains in imports to power German growth of 0.4 percent in the second quarter.

    Ifo economist Klaus Wohlrabe said market turmoil in China, fed by concerns about an economic slowdown, was barely reflected in the August sentiment survey. But neither were Tuesday’s moves by China’s central bank, which cut interest rates and relaxed bank reserve requirements.

    “The subject of China and emerging markets will have a greater importance in future,” Wohlrabe told Reuters.

    In Germany, Economy Minister Sigmar Gabriel played down the risk to Europe’s largest economy, saying developments in China would not damage the German economic outlook.

    (SD-Agencies)