OREANDA-NEWS. September 28, 2012. New lending business with enterprises and self-employed professionals in Germany increased by 3.2 % in the second quarter. That is the key result of the current KfW credit market outlook which KfW calculates exclusively for the German newspaper Handelsblatt on a quarterly basis. The positive trend is due mainly to the surprisingly strong demand for loans. Despite the weakening dynamic of economic growth, corporate investment and thereby demand for financing has picked up since the beginning of the year. A further moderate expansion in new lending business is expected for the third quarter. Starting in the fourth quarter further economic deterioration may also lead to a cooling of the credit market.

"German enterprises benefit from good access to credit and are taking advantage of the historically low interest rate level on the domestic credit market," said Dr Jorg Zeuner, Chief Economist of KfW Bankengruppe. The favourable supply situation is likely to continue due to the expansive monetary policy of the ECB and German banks' focus on their domestic market. "The German credit market has thus far remained largely immune to the strains at the European level; the European interest rate policy is having an impact in Germany. Even traditionally disadvantaged sectors, such as construction and trade as well as very small enterprises can draw on loan financing."

However, before the end of the year dampening demand is likely to affect the credit market. Germany's economic momentum is weak and the economy will grow by only 1.0 % in calendar-adjusted terms in 2012, which is only a third of the previous year's growth of 3.1 %. Corporate investments and demand for long-term loans are likely to slow down even more sharply.