KfW Research: very marginal growth in German corporate investments expected in 2015

  • KfW Research foresees only a slight rise of 0.9% for 2015 compared with the previous year
  • Increasing dynamism over the coming year thanks to growing capacity utilisation in the economy

Frankfurt am Main, 6-5-2015 — /EuropaWire/ — After a very positive start to the year, we saw a decline in German corporate investments from Q2 2014, shrinking in Q4 2014 by a further 0.3%. This rather weak starting level is another reason why only very marginal growth is expected in 2015. According to the KfW Investment Barometer, global modest demand combined with ongoing uncertainties in Europe continue to slow down companies’ willingness to invest in new machinery, equipment and factories. KfW Research foresees only a slight rise of 0.9% in corporate investments for the current year compared with the previous year.

However, the emerging economic tailwind in Germany and in the eurozone, supported by the fall in oil prices and the weak euro, should lead to an increase in companies’ capacity utilisation throughout the course of 2015. This will also have a delayed impact on investment activity. KfW Research anticipates a considerable rise in corporate investments in 2016 and is currently forecasting growth of 3%.

“For the time being, companies are refraining from making investments,” explains Dr Jörg Zeuner, Chief Economist at KfW. “Only when the economic upswing has further stabilised, will the trend be reversed.” However, this is assuming a rather cautious growth forecast. “There may still be some positive surprises: If the low energy prices, the weak euro and the expansive monetary policy of the European Central Bank have a better-than-expected positive impact on the economic dynamics in Germany and Europe, companies may reach their capacity limits this year and decide to make expansion investments,“ continues Zeuner.

The latest KfW Investment Barometer is available at

www.kfw.de/investbarometer

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