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German firms are feeling optimistic about 2017
Frankfurt am Main (ots) -
- Confidence rises among SMEs and large enterprises - Domestic demand remains sound as companies hope for a recovery of export markets - Upswing will enter fourth year under difficult conditions
Small and medium-sized enterprises in Germany are optimistic about the year ahead, according to the current KfW-ifo SME Barometer. In December their business climate rose 1.2 points on the previous month to 20.0 balance points. The indicator thus gained almost ten points since its low of February this year. The main factor that drove SME business sentiment up was their significantly more positive view of their business situation (+2.5 points to 29.0 balance points). While their expectations of future business just barely held steady on the previous month's level (down 0.2 points to 10.8 balance points), they remain above average.
Germany's large enterprises are even more optimistic about 2017 than SMEs. Their expectations rose by 1.5 points to 11.0 balance points. Large firms, which are often internationally oriented, appear to be banking on a recovery of the global economy next year. Since important emerging economies such as Russia and Brazil will likely come out of recession, that is definitely realistic. Their situation assessments were on a similarly positive level as those of SMEs (+2.3 points to 28.3 balance points), so that business confidence among large enterprises rose 2.1 points to 19.7 points in December. That was the highest level since July 2011.
"As the year is coming to a close, the German economy remains in good shape. The Brexit vote in June, the US election in November, the failure of Italy's constitutional referendum and the resignation of its prime minister in December, the increasingly difficult situation in Turkey and the Middle East - none of these many and often unexpected events were able to inflict any lasting damage on the positive trend in sentiment", summarised Dr Jörg Zeuner, Chief Economist of KfW Group. He added that the previously conspicuous gap in sentiment between SMEs and large enterprises has now closed thanks to the persistently sound domestic demand, which is now buoyed by hopes of an at least moderate recovery of export markets.
"Nevertheless, we must not lose sight of considerable political risks", Zeuner continued. The shape of future U.S. trade policy is still unclear, elections will take place in the Netherlands, France, Germany and possibly in Italy, and tough Brexit negotiations will probably start in the spring. "Since 2017 will have significantly fewer days, we expect overall economic growth of 1.3%. Germany's upswing will therefore enter its fourth year under difficult conditions."
The current KfW-ifo SME Barometer can be downloaded from www.kfw.de/mittelstandsbarometer