KfW-ifo SME barometer: Optimism is making headway

Frankfurt (ots) -

- Strong increase in business expectations by SMEs
- Assessment of the business situation likewise better
- Large companies cautiously optimistic

The business climate among small and medium-sized enterprises
improved in February from 6.1 points to 16.4 balance points. In its
100th issue the KfW-ifo SME barometer showed the third highest
increase in the business climate since the beginning of the series.
The impulses are emanating from both components. Business
expectations are virtually exploding after two strong increases in
the previous months and currently have improved by 8.8 points to 12.2
balance points. Only one time since German reunification has such a
high increase in expectation been achieved. In contrast, the sound
improvement in the assessments of the current situation seems almost
modest (+3.4 points to 20.3 balance points).

"The very clear improvement in business climate and expectations
in the SME sector is pleasing and confirms our positive forecast for
the economy. Already in the first quarter the German economy will
grow soundly again," said Dr Jörg Zeuner, Chief Economist of KfW. At
the same time, we need to maintain a grip on reality. Very strong
increases in expectations over a short period harbour some potential
for setbacks if disappointments arise. "The enterprises will have to
realise that the recession in the Euro area will continue to have a
braking effect for some time and the policy mix in the reforming
countries does not allow for very great expectations for the European
economy. In addition, the difficult election results in Italy bring
up new questions."

Along with the SMEs, in February large enterprises also assessed
their business situation (+3.3 points to 12.3 balance points) and
their expectations (+5.1 points to 4.8 balance points) more
favourably than in the previous month. Their business climate
improved by 4.2 points to 8.8 balance points. By itself this is a
good result but fades somewhat when measured against the vigorous
improvement in sentiment in SMEs and which again widens the gap
between both size categories after it had recently closed somewhat.
The more cautious optimism of large enterprises is understandable.
Economic risks are currently primarily coming from the global economy
and Europe, and export-oriented large enterprises would feel these
firstly and most strongly.

The current good mood, as the KfW-ifo SME barometer finds, is
based on a broad foundation. Besides the large retailers, which are
experiencing volatility due to the mood, across all sectors the
climate has improved. The increases are particularly strong in the
manufacturing industry, wholesale trade and construction, which are
key to economic growth. The SME business climate in the building
industry climbed to 32.5 balance points, thereby reaching a new
all-time high that even exceeded the very good mood at the time of
the construction boom after reunification.

A detailed analysis with data tables and charts on the current
KfW-ifo SME barometer are available under
www.kfw.de/mittelstandsbarometer.

Contact:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM) Christine Volk
Tel. +49 (0)69 7431 3867, Fax: +49 (0)69 7431 3266,
E-Mail: Christine.Volk@kfw.de, Internet: www.kfw.de