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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

25.05.2020 | ifo Business Climate Germany

“The companies acknowledge the easing that has begun with a sigh of relief – and rightly so! Thanks to the discipline of the population and the general acceptance of containment measures necessary for public health, also on the part of companies, Germany is on the right path. However, this path out of the Corona Valley is still a long one and will only run smoothly if the further necessary hygiene requirements are met. To complete it successfully, new confidence in the future is the key. In order to strengthen and consolidate the coming recovery, it is therefore essential to quickly draw up a growth and investment programme that takes into account the structural challenges facing the German economy and conveys a clear vision of sustainable economic development.”

Dr Fritzi Köhler-Geib, KfW Chief Economist

Further comments

German economy

25 February 2020

Coronavirus outbreak is delaying the recovery of the German economy

The German economy lost pace in the final quarter of 2019 and will probably sit just slightly above stagnation level in the first half of 2020 as well. The outbreak of the novel coronavirus is extending what has already been a record long industrial recession into the year 2020. We predict GDP growth of 0.8% in 2020, which is 0.1 percentage points lower than previously forecast. In its initial forecast for 2021, KfW Research expects growth to accelerate to 1.3%. Downward risks predominate.

Current KfW Business Cycle Compass Germany  (PDF, 96 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.

8 May 2020

SMEs are now clearly in the throes of the coronavirus slump

SME business sentiment continues in freefall, dropping even more sharply in April than in March. The mood is thus even more depressed than eleven years ago, at the height of the financial crisis. Both subindicators stand out with new negative records. Situation assessments have deteriorated more than ever before and business expectations have plunged to a new historic low. We are confident nonetheless that we saw sentiment bottom out in April – thanks to the comprehensive coronavirus containment strategy, the successes achieved in stopping the spread of infections and the now announced or already implemented easing of restrictions.

Current KfW-ifo SME Barometer  (PDF, 116 KB, non-accessible)

European Economy

5 December 2019

Brexit postponed again but euro area growth remains weak for the time being

From July to September, the euro area economy maintained the sluggish pace of growth of the previous quarter. This is no disappointment considering the decreasing sentiment indicators and temporary escalation of political risks. France and Spain in particular exhibited robust economic performance, while Italy and Germany – which is heavily affected by the industrial recession – expanded only marginally.

Some of the political headwind has also subsided of late. In particular, the hard Brexit which was still looming in the summer did not occur on 31 October, which prompted us to upgrade our forecast for the winter half year. KfW Research now expects the low but nonetheless clearly positive growth to continue in the current and next quarter, along with a gradual return to trend growth from spring. Economic output in the euro area should grow by 1.2% in all of 2019 and by 1.0% in 2020.

Current KfW Business Cycle Compass Eurozone  (PDF, 86 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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