GERMANY CORPORATE PAYMENT SURVEY 2016: SO FAR, SO GOOD, BUT THE DEVIL IS IN THE DETAILS
2016 marks the first time Coface has carried out a payment survey for Germany. This follows on from other surveys presented this year for China, seven other Asia-Pacific countries and Morocco. The German survey shows that, despite the country’s solid economic situation, nearly 84% of companies are affected by delays in payments. Nevertheless, the positive situation of German companies is reflected in their assessment of a slight reduction in financial volumes of outstanding receivables over the past year. Payment delays for the companies surveyed remain within manageable temporary limits. Potential liquidity risks from very long overdue receivables are thus comparably low.
The picture across the business sectors is mixed. According to Coface’s calculations, payment delays amount to 41.4 days on a cross-sector average. However, some segments report much longer payment delays, particularly the Mechanics and Precision Industries (60.0 days) and Transportation (55.2 days). The Chemicals/Oils/Minerals and IT /Telecommunication sectors have enjoyed the shortest overdue periods.
Questioned on their expectations regarding overdues, the “optimists” and “pessimists” are fairly balanced. While Transportation and the Wholesale trade expect a worsening, Paper/Packaging/Printing and the Mechanics/Precision Industries anticipate significant improvements
Private consumption is driving the economy, investment dynamics remain subdued
Both this year and next the German economy will not escape unscathed from the considerably increased global risks. Compounding the continuation of growth at half-mast in the Emerging Markets, export companies are increasingly faced with political risks arising from the direct European environment. With the result of the Brexit vote, these political risks reached a (temporary?) high. The management, or even resolution, of these risks will loom large for both the financial markets and the real economy.
Tensions and insecurities remain in the political arena. Besides the upcoming presidential elections in the USA later this year, key elections will be held in the two biggest EU countries in 2017 – in France (presidential elections) and Germany (parliamentary elections for the Bundestag). Thus, at first glance, it may seem surprising that Coface expects a solid economic growth for Germany of 1.5% for this year and 1.7% for 2017 – although exports are likely remain under pressure.
Germany’s robust economy can primarily be attributed to the strong upward movement in consumer spending. As net exports will no longer be the key driver for economic growth (due to weak export prospects and the strong demand for imports), private consumption and public consumption expenditure have become the guarantors of Germany’s economic growth. Private households are benefiting from the excellent situation on the labour market, with significantly higher pay increases than in the past, the statutory minimum wage, strong pension increases at midyear and continuing low inflation rates. Public consumption expenditure has mainly increased due to the large-scale immigration of more than 1 million refugees. For the Federal Government alone, the Federal Minister of Finance has entered EUR 20 billion into the budget, which represents about 0.7 percent of GDP. In addition, a further 50% of this amount is expected from the German Länder.
As such, private and government consumption remain the main stability buffers for absorbing and helping to compensate for the economy’s weak external sectors. Investments, as a domestic component, are also showing signs of weakness, mainly due to risks in the external environment. For both 2016 and 2017, German companies will only increase their investments to a manageable extent, as the uncertainties concerning the future development of the world economy are too important.
Leyla ZERGER SİDAL
İLETİŞİM VE PAZARLAMA
TEL. : +90 (212) 385 99 60