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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.

Media and Comments of the Chief Economist Dr Fritzi Köhler-Geib

26.01.2021 │Fed meeting January 2021

"The economic recovery in the US has slowed significantly recently. Rising infection rates and the accom­panying containment measures are weighing on the job market and households. Total non-farm employment fell by 140,000 in December and retail sales recorded a decline for the third month in a row. The Fed will maintain its loose monetary policy until the US economy stabilises. No change is expected in either interest rates or the purchase programme. Falling infection figures combined with fiscal stimulus should boost economic activity in summer and raise the inflation rate in the medium term. However, last year's switch to an average inflation target will allow the Fed to approve price increases of more than 2% for a while, as the inflation rate has already been below the monetary guardians' target for some time. Moreover, excess capacities that still exist will counteract a significant overshooting of the two-percent mark. A key rate hike seems therefore ex-tremely unlikely this year."

Previous comments from Dr Fritzi Köhler-Geib

Further comments

German Economy / European Economy

KfW Business Cycle Compass Germany / Eurozone

24 November 2020

Hoping for a strong recovery after a difficult winter

In the summer months Germany and the euro area were able to offset a large part of the previous economic contraction. However, as a result of the renewed sharp rise in the number of new COVID-19 infections since the beginning of autumn and the restrictions that became necessary, the recovery will stop temporarily. A decline in economic output is to be expected for the winter half-year of 2020/2021. Based on the encouraging perspective that effective vaccines will soon be available, KfW Research forecasts that the return to public life and social activities will lead to a surge in growth from next spring. Germany is set to grow by 4.0% in 2021 and the euro area by as much as 5.1%, starting from a lower level.

Current KfW Business Cycle Compass Germany / Eurozone  (PDF, 120 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 2020

SME business confidence was steady before the lockdown

In the first half of December, Germany’s SMEs were still relatively unimpressed by rising new infections and the prospects of a tougher lockdown. Their business confidence rose 1.4 points to -10.6 balance points. SMEs’ situation assessments improved noticeably, while their expectations were only slightly higher. The positive outlook for an easing of the situation in the medium term through the rollout of effective vaccines is likely to be neutralised by a dimmer view of the coming months. However, the specific closure of child daycare centres, schools and many stationary retail shops, which went into effect on 16 December until at least 10 January, was not yet specifically known when most of the responses were returned.

Current KfW-ifo SME Barometer  (PDF, 88 KB, non-accessible)

European Economy

From May 2020 combined with German Economy

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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