Ifo Institute: Expansion of plant and equipment expenditure and equipment leasing set to continue also in 2008

The business climate in the German leasing sector worsened in the summer months of 2007, reflecting the decline in the confidence indicator for industry and trade. Nevertheless, assessments of the current business situation seem to indicate some amount of stabilisation. The current situation is again assessed much more favourably than the six-month outlook. The early indicator for investment indicates for 2008, after the strong improvement in 2007, a noticeable slowdown in growth in plant and equipment expenditure, including non-tangibles. The expected growth will still amount to 4 percent in nominal terms. Price adjusted and for equipment purchases alone, this would mean a plus of about 6 percent. The growth pace will decline, however, from quarter to quarter, since there will be a weakening in the cyclical components. For 2009, the beginnings of a weak investment period are emerging.