Clear cut backs in investments and leasing - 2009 threatens to be recessionary

As the most recent Ifo Investment Survey shows, German leasing companies have not escaped the general downturn in economic activity. In the first three quarters of 2008, leasing still received support from tolerable investment activity. As of late autumn both investment activity and leasing business declined sharply. For the development of spending on plant and equipment in 2009, there are very high forecasting risks. The current investment cycle, after its accelerated downturn in the closing months of 2008 and in 2009, will move towards its trough. This cyclical weakening will be amplified by the effects of the world financial crisis and, last but not least, by the expected weak sales in automobiles. The Ifo December economic forecast assumes that equipment spending will decline by 10 percent, price adjusted, in 2009; for investments in non-residential construction, the estimated value is about minus 2 percent.