KfW Credit Market Outlook Q1 2024

Corporate lending has shrunk considerably. In the third quarter of 2023, new business lending calculated by KfW Research already plunged by 15.7% on the previous year. In the fourth quarter, that decline slowed to -12.5%. This sharp drop was driven by the high volume of loans extended during the energy crisis in the reference period of the previous year. The credit market has thus emerged from its low point for now.

Investment expenditure by companies hardly bolstered lending business anymore. The slight drop in credit interest rates and the less pronounced weakness in demand, however, positively impacted on the development of lending activity.

In order for the credit market to achieve a turnaround, however, it is necessary for economic activity to pick up and expectations of falling interest rates to solidify. Given the pessimistic economic outlook, we still expect a minor contraction in lending business in the first half of 2024. Lending should then pick up again later in the year.

KfW Credit Market Outlook Q1 2024(PDF, 142 KB, accessible)