Majority of German SMEs pessimistic about economic prospects

The majority of German small and medium-sized entities (SMEs) are quite pessimistic about economic prospects. Many businesses have already registered significant drops in incoming orders as well as turnover and profit. This is the finding published in the new quarterly report by Creditreform. Prospects for the months to come are the most pessimistic in four years. The economic index by Creditreform fell by 2.6 points to 7.8 points at the end of 2008 which was a clear signal for a downward trend.

A majority of small and medium-sized entities consider the current economic situation to be quite good. The index describing the current economic situation currently stands at 19.0 points which is 7.7 points less than in the previous quarter and 11.4 points less than one year ago. With regard to future economic prospects, however, a majority of small and medium-sized entities is quite pessimistic. The subindex describing future expectations fell by 4.0 points. The investment propensity of businesses is slightly below the mean value of many years.

The insolvency risk for German businesses has once more slightly increased in the fourth quarter 2008. The risk indicator by Creditreform (CRI) reflecting insolvency risk is currently standing at 2.22 points as compared to 2.17 points in the previous quarter. Currently there are 222 companies per each 10,000 businesses which have problems such as payments which are overdue or even filed for insolvency.

In recent months companies settled overdue invoices after an average period of 13.9 days which is a clear increase as compared to the situation one year ago (12.9 days). The average credit worthiness of businesses, however, has not changed for the time being. GERMAN