OREANDA-NEWS. Business investment in Germany overcame the lowest point of decline last year and will revive again in 2013. KfW expects investors to continue exercising restraint in the first half of the year because of low capacity utilisation rates but expansionary forces will become more prevalent from the middle of the year and investment activity will then increase. For the year as a whole, the balance is likely to be a "red zero" of -0.1%.

"Business investment will probably stagnate this year, but that is good news!", Dr Jorg Zeuner, Chief Economist of KfW Bankengruppe, commented on the results of the current KfW Investment Barometer. "The decline has finally stopped, and as the year progresses companies will be increasingly willing to invest in machinery, equipment or factories. Then in 2014 business investment could grow again, provided the recession in the Eurozone is over."

For the fourth quarter of 2012 the current KfW Investment Barometer recorded the fourth consecutive decline in business investment in Germany. This means an overall decline of 2.5% for the year 2012 as a whole, despite the extraordinarily favourable interest environment. However, a relatively moderate fourth quarter decline of -0.3% against the third quarter and the most recent business surveys indicate that the lowest point has been overcome.

A reason to be optimistic about investment activity increasing is that the global economy, particularly the US economy, is recovering again in 2013. This will revive exports and encourage exporters to invest. The continuing favourable interest environment and good access to credit make expansion investment easier as well. In addition, the energy turnaround is creating incentives for rationalisation investment to improve efficiency and lower costs. In spite of all positive signals, downward risks remain high, with the most uncertainty coming from further developments in the Eurozone.