KfW Research: SME sentiment stalls

• KfW ifo Business Climate Index has stagnated
• Businesses are more pessimistic about the future than in the previous month
• Export expectations among small, medium-sized and large manufacturers have dropped noticeably

Sentiment among German SMEs had improved significantly in March, but in April the business climate almost stagnated. The index rose by a negligible 0.2 points to -17.4 balance points. That puts the KfW-ifo SME Barometer well below the long-term average represented by the zero line. The only sector where SMEs were more optimistic in April was construction.

To be sure, businesses assessed their current situation somewhat more favourably than in the previous month and more positively than they have since August of last year. But their six-month business expectations dropped.

“The scrapping of the debt brake raised hopes of strong fiscal impetus in March and led to a surge in expectations. But in April, the escalating trade conflict already extinguished this new hope, at least in part”,

said Dr Klaus Borger, economist at KfW Research.

KfW evaluates the findings of the ifo Institute’s economic surveys for the KfW-ifo SME Barometer, broken down by company size classes and main economic sectors.

The overall improvement in sentiment in April was slightly stronger among large enterprises than among SMEs, climbing by 1.0 points to now -23.2 balance points, mainly thanks to improved business sentiment among service providers and retailers. But even large enterprises held a positive view only of their current business situation, while they were more pessimistic about their prospects than in the previous month.

Specifically, however, business sentiment among the heavily export-oriented large manufacturers dropped by 2.4 points to now -35.1 balance points. The deep worries and fears arising from the escalating tariff conflict are most clearly reflected in their specific export expectations, which fell by 11.8 points to -18.8 balance points, 3.1 times a typical monthly variation. That was slightly more than among SME manufacturers, where the drop in export expectations was 2.9 times as steep.

“Businesses in Germany are vacillating between hope and fear. The changes in the business climate vary strongly between economic sectors, but also between SMEs and large enterprises of one at the same economic sector. Such a hazy picture is typical of an economy looking for direction”,

said Dr Borger.

The current KfW-ifo SME Barometer can be downloaded from: KfW-ifo SME Barometer | KfW

KfW supports SMEs with a number of promotional programmes on behalf of the Federal Government. More information is available at We are strengthening the SME sector (German only).