KfW Credit Market Outlook December 2025

The anticipated recovery of the German economy will also provide positive impetus for the credit market. In the third quarter, growth of new lending from banks to businesses already accelerated slightly to 1.9% for the year. But the momentum is still weak, as new lending trended downward on a price-adjusted basis.

Growing default risks are among the reasons banks have continued to apply strict lending criteria and credit interest rate reductions are coming to an end. But the freeze in the credit market could thaw in 2026 nonetheless. We expect the spending package of the Federal Government to produce not just more economic growth but a revival of investment activity. As a result, businesses will have growing financing needs and lending risks for banks are likely to fall again. We therefore predict credit growth of around 3% for the start of the year – with potential for higher growth over the course of the year.

KfW Credit Market Outlook December 2025(PDF, 179 KB, accessible)