New lending in Germany gets a temporary boost

Frankfurt am Main (ots) -

- New business loans up 2.6% in fourth quarter of 2016
- Increase driven by the expectation of rising borrowing costs,
but businesses remain reluctant to invest
- KfW Research expects business lending to continue rising
moderately in the first half of 2017 but flatten out again
towards the middle of the year

Estimates by KfW Research indicate that new lending from banks to
businesses and self-employed persons rose by 2.6% in the final
quarter of 2016 compared with the same period in the previous year.
Growth rates are likely to be positive in the first half of 2017 as
well. But a strong recovery is not to be expected, as shown by the
current KfW Credit Market Outlook. On the contrary: the tailwind in
the credit market will likely abate from the middle of the year as it
is driven by the expectation of rising borrowing costs and not by
accelerating business investment.

Adjusted for prices, business investment declined for the third
time in a row in the final quarter of 2016 and thus failed to
contribute to recent growth in the credit market. That growth is
rather due to businesses' expectations of borrowing costs rising in
Germany in the medium term. Businesses appear to be meeting their
foreseeable funding needs sooner rather than later. The interest rate
turnaround in the USA and speculation over a monetary policy trend
reversal in the euro area on the back of a decreasing risk of
deflation appear to be having an impact.

"Investment momentum remains subdued even though businesses are
confident, the economy is doing well, funding conditions are
outstanding and businesses are increasingly operating at capacity",
said Dr Jörg Zeuner, Chief Economist of KfW Group. "Extraordinary
political risks, especially the uncertainty over future economic
relations with important partners such as the USA and the UK, are
making it harder for businesses to plan in the long term and making
them more reluctant to invest. I do not believe that new business
lending this year will be able to finally break out of the sideways
movement we have observed since 2011."

KfW Research calculates the KfW Credit Market Outlook exclusively
for the German business newspaper Handelsblatt. The current edition
is available at: www.kfw.de/kreditmarktausblick.

Pressekontakt:
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

Original-Content von: KfW, übermittelt durch news aktuell