Glum Times Abroad for German Firms: Struggling Economies and High uncertainties Plague Businesses Worldwide
Struggling Global Conditions Pose Greater Challenges for German Businesses
Hangout Spot:
German firms are finding foreign waters less appealing, as a gloomy economic climate and mounting uncertainties confront them in nearly every corner of the globe. The economic outlook for these businesses across the globe has plummeted, according to the Spring 2025 World Business Outlook (WBO) by the Chambers of Foreign Commerce (AHK).
Unwelcome News:
Volker Treier, the chief of foreign trade at the German Chamber of Industry and Commerce (DIHK), expressed his disappointment: "U.S. trade policies are slamming German companies overseas with brute force. The reaction to these policies, alongside global repercussions, are sending shockwaves through the global economy. Investors are losing faith in stability." This situation has led to delays in investments, the reevaluation of traditional trading ties, and growing anxiety.
Surveying the Horizon:
The survey gathered the perspectives of around 4,600 German companies active in over 90 countries, polled between March 17 and April 14, making their responses especially telling given the period's significant geopolitical upheaval. The findings reveal a muted global mood: only 19% of companies anticipate an improvement in local economic conditions. This number dramatically dropped from 27% in the previous survey. On the contrary, the share of firms forecasting worsening conditions increased to 33%.
Digging Deeper:
Looking closer at the regional challenges, U.S. trade policies continue to be a major concern, with half of the surveyed German companies citing burdens from increased customs duties and new tariffs, a sharp hike from 24% the previous year. The ongoing tariff battle, including a 25% tariff on German cars and potential duties on pharmaceuticals, is causing significant stress among exporters.
In China, complying with local content requirements remains a top challenge, according to 44% of respondents. The bureaucratic maze in the Eurozone presents additional hurdles, with 50-55% of German companies facing regulatory opacity, difficulties accessing public contracts, and cumbersome local certification requirements. In Russia, sweat-inducing sanctions still have a stranglehold on businesses, affecting 78% of firms negatively.
Homegrown Hurdles:
German and EU regulations also pose significant challenges: 83% of companies reported difficulties adhering to legislation like the German Supply Chain Sustainability Act (LkSG), the Packaging Directive, and the Carbon Border Adjustment Mechanism (CBAM). Even though approval times at the Federal Office of Economics and Export Control (BAFA) have improved, 43% of respondents told of delays.
Adapting and Awaiting:
To stay competitive, businesses are pushing for swift trade agreements and reduced bureaucratic obstacles. The German economy is fighting a third consecutive year of stagnation, exacerbated by high energy costs and declining demand from major markets like China. The government is planning large-scale infrastructure and defense investments to fuel growth, but their impact is yet to significantly counter the current pessimism. More than a third of German firms are preparing job cuts in 2025 in light of the bleak economic outlook.
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- The Chamber of Foreign Commerce (AHK) warns in the Spring 2025 World Business Outlook that the economic outlook for German businesses globally has deteriorated, with only 19% of companies anticipating an improvement in local economic conditions.
- Volker Treier, the chief of foreign trade at the German Chamber of Industry and Commerce (DIHK), has expressed concern over U.S. trade policies, stating that increased customs duties and new tariffs are causing significant stress among exporters.
- In the survey, 44% of German companies operating in China highlighted complying with local content requirements as a top challenge, while 50-55% of firms faced regulatory opacity, difficulties accessing public contracts, and cumbersome local certification requirements in the Eurozone.
- The ongoing tariff battle and potential duties on German cars, pharmaceuticals, and other goods, as well as the stranglehold of sanctions in Russia, are contributing to the general gloom facing German firms across the globe.
- Businesses are pushing for swift trade agreements, reduced bureaucratic obstacles, and vocational training programs to stay competitive, amidst rising uncertainty and gloomy outlook brought about by various factors like war-and-conflicts, politics, and economics.
