German equities faced a downturn mid-week, with the Organisation for Economic Co-operation and Development (OECD) revising its economic growth forecasts for the eurozone in 2025 downwards. As markets closed on Wednesday, the blue-chip DAX index registered a loss of 0.39%. The decline was significantly influenced by SAP, which saw a drop of 2.42%.
This downturn coincides with reports surfacing regarding SAP's involvement in a US investigation concerning alleged price-fixing. Bloomberg News revealed that federal court records indicate the Justice Department has been scrutinizing the German software giant since at least 2022. Authorities suspect that SAP may have conspired with product reseller Carahsoft Technology and other entities to inflate technology prices offered to the government.
The investigation is reportedly also considering possible falsification of statements to influence pricing structures. Parallel to this, the OECD released its latest Economic Outlook, adjusting its GDP growth prediction for the eurozone down to 1.3% for 2025, a slip from its prior estimate of 1.5%. The organization maintained its GDP growth outlook for 2024 at 0.7%.
This revision comes as the OECD has upgraded its inflation rate forecasts, both headline and core, for the eurozone for the years 2024 and 2025. Focusing specifically on Germany, the OECD has reduced its economic expectations to a mere 0.1% for 2024 and 1% for 2025, compared to earlier predictions of 0.2% and 1.2%, respectively.
In another concerning indicator for Germany's economy, the ifo Export Expectations index fell even further in September, plummeting to -6.3 points, down from -5.2 the previous month, highlighting the ongoing challenges faced by Germany's export sector stemming from tepid international demand. Analysts from ING have expressed that the chances of a cut during the upcoming meeting on 17 October appear minimal.
They note that this meeting will likely yield little new data beyond what the European Central Bank (ECB) has already considered in its assessments from September. As a result, there is skepticism regarding the ECB's intentions to make decisions based on weaker PMI and ifo figures..