Economic bright spots emerge in Germany

30th November 2004, Comments 0 comments

30 November 2004 , HAMBURG - The wave of corporate insolvencies in Germany has ebbed somewhat in the course of this year but could rise again slightly in 2005, a top credit insurance company reported on Tuesday.

30 November 2004  

HAMBURG - The wave of corporate insolvencies in Germany has ebbed somewhat in the course of this year but could rise again slightly in 2005, a top credit insurance company reported on Tuesday.

At the same time, Germany's information technology (IT) sector is becoming more and more optimistic about its prospects and the nation's key machinery sector reported Tuesday that it posted year-on-year 4 percent rise in orders in October, describing it as a "normalisation" of business developments.   

Credit insurers Euler Hermes said in Hamburg that the number of business insolvencies in 2004 is now projected at 37,700, a drop of 4.1 percent from last year.

But the figure could rise again in 2005 by some 0.8 percent to around 38,000 insolvency cases, it warned.

The company said that the amount of claims from this year's insolvency cases will reach a projected EUR 28 billion, down by 8 percent from the 2003 volume.

Euler Hermes said that the drop in insolvencies this year could have been higher, given that there is a projected 21 percent decline in company bankruptcies in industry and a 7 percent drop in building outfit insolvencies.

But insolvencies among small and one-person firms and among persons self-employed in the various professions is projected to rise by 5 per cent to 15,800 cases in 2004. These make up 42 per cent of the total number of insolvencies.

Meanwhile, Will Berchtold, head of the IT federation BITKOM, said in Berlin that after three years of stagnation, the IT industry is projected to finish the year 2004 with a 2.5 percent rise in turnover to EUR 132 billion.

In 2005, he said, the industry is expecting a further 3.4 percent rise in sales to EUR 136 billion, while adding 10,000 jobs. Current employment in the IT sector is 741,000.

At the same time, the industry would see some EUR two billion worth of investments in new systems, services and software.

"Good ideas and good business plans will always find capital," Berchtold declared.

Berchtold said a survey of IT firms in Germany showed that 74 percent expected rising sales in 2005, with half of that group expecting the increase to exceed 5 percent. Some 15.5 percent of firms expect their sales to hold steady.

The survey also found that 46 percent of IT companies expected to create new jobs next year, as against only 12 percent which foresaw having to lower their payrolls, he reported.

Berchtold said the expected percentage increase in sales turnover next year would outpace the rise in new employment. Many companies were still cautious and were hoping to be able to meet their expected growth targets with their current personnel.

The more optimistic prospects follow a rough period in which over the past several years some 4,000 IT and telecoms companies went under in a wave of restructuring and consolidation in the wake of the downturn of the dot-com economy. 

This coincided with Germany's machinery sector reporting expanding order books.

The engineering federation VDMA in Frankfurt said that domestic orders were 2 percent higher in October, while foreign orders gained by 5 percent over October 2003 levels.

The October figures posed a "normalisation at a high level" after previous months had seen double-digit gains for the key sector of the German economy.

The robust foreign demand showed an industry remaining buoyant on external markets despite the strong euro making exports more expensive, the VDMA figures showed.

[Copyright DPA with Expatica]

Subject: German news


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