There are more bright spots for German companies in international business than at home
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The challenges are significant, yet German companies operating internationally remain optimistic about the future in numerous markets. This is demonstrated by the latest AHK World Business Outlook, based on feedback from nearly 3,500 companies worldwide.
Volker Treier
© DIHK / Werner Schuering
As the survey shows, the mood among German companies at their international locations is significantly more positive than in Germany. Despite global uncertainties – from inflation and geopolitical tensions to weak demand – the global economy and global trade are developing robustly.
"Our companies need to adapt quickly to global uncertainties in order to take advantage of the international opportunities that arise," explains Volker Treier, Head of Foreign Trade at the Association of German Chambers of Commerce and Industry (DIHK). The AHK World Economic Outlook shows how resilient they are and how optimistic they remain despite all the challenges in many markets.
In the USA, assessments are still far more positive than the global average, even though the mood of local companies has deteriorated somewhat during the election campaign: 38 percent of companies expect the local economy to improve over the next twelve months. Globally, only 27 percent expect this.
In the USA, things are going well for German companies and almost 60 percent expect their business to improve over the next twelve months. "In North America, German companies find attractive business conditions that are lacking at home. This gives companies planning security", says Treier.
The economy in the People's Republic of China seems to have reached its lowest point. Local German companies are once again somewhat more confident about economic development in the country: 16 per cent expect an improvement, compared to just 7 per cent previously. The same picture emerges for the development of their business. Here, 28 per cent of companies are optimistic about the coming year.
There are mixed signals in Asia: the economy in China is still struggling with weak demand and difficult market conditions. In other parts of Asia such as India and South East Asia, on the other hand, the economic situation is stable. Business expectations there have improved slightly compared to spring, which also indicates that German companies are increasingly diversifying in the region. "For many companies, it is a smart move to reduce their dependence on individual markets through greater diversification", comments Volker Treier on the trend. "This allows them to improve their resilience."
The picture in Europe, on the other hand, is more mixed. While business expectations in the EU remain unchanged compared to spring, companies in Eastern Europe and Turkey are particularly struggling with the current geopolitical tensions and the economic consequences of the war in Ukraine. Despite these challenges, Europe remains the most important market for many companies.
At a time of major geopolitical tensions and structural upheaval, many companies are unsettled. This is also limiting the global economy. Despite the positive outlook in some regions, the risks remain high. The biggest concern for companies is still weak demand (50 percent), followed by structural risks such as economic policy uncertainties (47 percent) and a shortage of skilled workers (35 percent). In China and Europe in particular, many companies are struggling with falling demand and rising costs, which is further increasing economic pressure. In North America, the prospect of potential trade barriers and supply chain problems is unsettling companies.
Another focus of the survey is the willingness of companies to invest, which depends heavily on the region: employment intentions in the Asia-Pacific region continue to be above average. While numerous companies in North America, the MENA region and sub-Saharan Africa are prepared to launch new projects and create jobs, the situation is different in China and Eastern Europe. Here, many companies are cutting back and planning fewer investments or staff increases.
"Despite the ongoing global turbulence, German companies are proving resilient in many markets", summarises DIHK Head of Foreign Trade Treier. "Particularly in North America, parts of Africa and Asia, they are finding location conditions that are helping them to secure their competitiveness there. The challenges are great, but there are also great opportunities in many places."
The complete survey results can be downloaded here:
