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An economy does not grow consistently but rather in cycles, with alternate phases of poor or excessive utilisation of overall economic capacities. The analyses of these cycles and the forecasting of economic turnarounds are of great importance. The economy sets the economic framework within which private households, businesses and the state make decisions on consumption or investments. Monetary and fiscal policies also differ depending on the phase in the economic cycle. KfW Research analyses the economies in Germany and the Euro area and publishes its own quarterly forecasts for real GDP growth.

Current comments from KfW Research

15.01.2020 | GDP Germany

Dr. Fritzi Köhler-Geib

“The very long upswing came to a virtual standstill in 2019; with real growth of 0.6%, Germany fell considerably short of its potential. Solid domestic demand alone saved the economy from recession last year. By contrast, the difficult foreign trade environment meant permanent stress for German industry, which also has to cope with the necessary structural change towards environmentally friendly products and production processes. Although the foreign trade burdens are likely to ease in the course of 2020, they will not disappear. In addition, there are geopolitical risks arising from the US-Iran conflict that are difficult to calculate.”

Dr Fritzi Köhler-Geib, KfW Chief Economist

15.01.2020 | Germany’s general government surplus

Stephanie Schoenwald, KfW Economist

“Demography, climate change and digitalisation will present Germany with epoch-making challenges in the 2020s that have now begun. The more resolutely and rapidly these are tackled, the better. Investments in the digital and physical infrastructure, innovation and education are the key to this. There is ample fiscal space, as the huge government surplus of 1.5% of GDP underlines.”

Dr Fritzi Köhler-Geib, KfW Chief Economist

Further comments

German economy

22 November 2019

Germany: The economic stalemate continues for the time being

The German economy has narrowly escaped a technical recession, growing at a rate of 0.1% in the third quarter of 2019. Economic growth should be equally weak in the final quarter. KfW Research now expects real growth of 0.5% for all of 2019 and 0.9% for 2020 (previous forecast: 0.4 and 0.6%). The upgraded forecast is based on the moderate easing of the US’s trade conflicts and the avoidance of a hard Brexit at Halloween. The growth pickup of 0.4 percentage points expected for 2020 is exclusively due to the additional output generated on four additional working days (calendar effect). Given continuing substantial uncertainties, the economy remains vulnerable to negative surprises.

Current KfW Business Cycle Compass Germany  (PDF, 149 KB, non-accessible)

KfW-ifo SME Barometer

SMEs play a decisive role for the growth and prosperity of an economy. Using its unique surveys, studies and statistics, KfW Research analyses the needs of SMEs in Germany. The KfW-ifo SME Barometer indicators are based on a scale-of-enterprise evaluation of the ifo economic surveys, from which the well-known ifo business climate index is calculated, among others. Around 9,500 businesses, including around 8,000 SMES, from manufacturing, construction, wholesale, retail and services (excluding lending, insurance and state) are polled monthly regarding their economic situation.

30 December 2019

Despite minor bright spots at the end of the year, the road to a rebound is a long one

There is still no real improvement in the SME business climate. Confidence levels picked up slightly in December but have remained close to the zero line for the fifth consecutive month, which illustrates that the economy is lacking direction. Sentiment among large enterprises shows somewhat stronger improvement compared with SMEs but still hovers on a much lower level. These findings illustrate one thing in particular: In light of the prolonged phase of international uncertainties, German enterprises are happy even with minor bright spots.

Current KfW-ifo SME Barometer  (PDF, 124 KB, non-accessible)

European Economy

6 September 2019

Heading for a lull – euro area faces prolonged phase of weakness

Amid a contraction in overall economic output in Germany, the euro area’s largest economy, the monetary union as a whole nevertheless managed to achieve meagre growth of 0.2% on the previous quarter.

We are now more sceptical about the further outlook than in the spring. The most recent business surveys show that there is no end in sight to the industrial recession. The escalating trade conflicts and the UK government’s confrontational Brexit strategy are both taking their toll.

We therefore expect the economic weakness to continue until mid-2020 and have downgraded our growth forecast slightly to 1.0% for the current year and sharply to 0.7% for the coming year.

Current KfW Business Cycle Compass Eurozone  (PDF, 183 KB, non-accessible)

KfW Research Business Cycle Clock Eurozone

The KfW Research Business Cycle Clock portrays the current economic trend using the output gap, i.e. the deviation of the actual economic output from the output achieved at normal capacity utilisation in the euro area. This allows for a simple interpretation of current economic data and classification into the four categories of a business cycle: upturn, boom, downturn, recession.

Details on KfW Research Business Cycle Clock  (PDF, 61 KB, non-accessible)

Our newsletters report on the economic and social development of Germany and Europe, as well as on topics of global economic and development policy interest.



KfW Research, KfW Group, Palmengartenstrasse 5-9, 60325 Frankfurt, Germany,

KfW Research

Current analyses, indicators and polls on business cycles and the economy, both in Germany and worldwide.

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