The low point in the corporate lending market was reached in the second quarter with a decline of 12.7 percent. KfW expects an increase of just under 1 percent in the fourth quarter of last year compared to the same quarter of the previous year.
Due to current supply bottlenecks and the energy market, prices for operating resources are currently rising. This is also increasing companies' need for funds. Due to a significant order backlog in the manufacturing sector, Study authorsthat investment projects have been delayed. They therefore expect a compensatory catch-up movement by the end of the year.
"The coronavirus pandemic is overshadowing the credit market recovery"
However, the emergence of the Omicron virus variant is once again significantly disrupting the economic environment. The investment environment is deteriorating, supply bottlenecks could prolong, and new restrictions to contain the pandemic are likely.
“The coronavirus outbreak is overshadowing the credit market recovery,”
says Fritzi Köhler-Geib, Chief Economist at KfW.
"In principle, the conditions are in place for stronger investment activity and lending in 2022, primarily due to the strong order situation in industry and continued favorable financing conditions. Furthermore, investments were postponed during the pandemic, so catch-up effects are to be expected. However, Omikron is now bringing us new uncertainty, particularly regarding the timing of the recovery. I currently expect credit growth to accelerate only in the second half of the year."
