BERLIN: According to Coface, a worldwide leader in credit insurance, the signs for the German economy and for further economic development are promising, with a high level of stability.
This year’s gross domestic product (GDP) is expected to grow by 1.8%, with a marginally smaller rate of 1.7% expected next year. The primary growth driver for 2017 will once again be private consumption, fuelled by the country’s record-high levels of employment. Risks for the German economy could occur on the export side, as a result of cooling down in some of the major target countries for German exports, particularly UK, China and USA.
Within this environment, Coface forecasts that the downward pressure on insolvencies will continue, with the fifth year in a row of record lows in 2017 (falling to a volume of around 21,000.) However, this downward trend is expected to continue at a slightly slower pace. After decreasing by 5% this year, Coface forecasts a further decline in bankruptcies by 4.2% in 2017.
Despite the positive outlook, the amount of outstanding claims in insolvency procedures could rise further, as larger companies in several sectors are under increased pressure from competition, costs and profit margins. There are more insolvencies among economically larger companies, such as Steilmann and Unister, despite a decreasing number of insolvencies in absolute terms.
“The stable outlook for the German economy does not mean that companies in Germany will be able to lower their guard in the coming year. There are a number of external risks THAT could particularly affect Germany’s export-oriented economy. In addition, after the reform fatigue of the Grand Coalition, we cannot expect to see new far-reaching economic policy measures from the next government. These uncertainties will dissuade companies from extending their investments beyond manageable limits in the coming year,” explained Dr. Mario Jung, Coface Economist for Northern Europe.
