International Business: Pessimism Overwhelms German Firms Abroad
Global businesses, particularly those based in Germany, experience worsening conditions on a global scale.
In an unfavorable turn of events, German companies operating internationally grapple with worsening conditions and heightened uncertainty across nearly all regions globally. The latest World Business Outlook (WBO) from the Chambers of Foreign Commerce (AHK) for Spring 2025 offers disheartening news, revealing a shattered economic outlook for German companies worldwide.
Volker Treier, foreign trade chief at the German Industry and Commerce Chamber (DIHK), shares his concerns, stating, "The new US trade policy is hammering German companies at their overseas locations. Global economy shocks are cascading from US trade policy and international reactions to it, eroding investor trust in stable conditions." This undesirable scenario leads to postponed or canceled investments, prompting companies to critically reevaluate traditional trade relationships.
The survey, comprising over 4,600 German firms in more than 90 countries, was conducted between March 17 and April 14. Conducted amid significant geopolitical turmoil—including "Liberation Day," when US President Donald Trump announced tariffs against most major trading partners—the survey reveals a gloomy global mood. Only 19% of companies anticipate an improvement in the local economy, contrasting to the fall figure of 27%. The number of companies forecasting a deterioration rises to 33%.
A Mixed Portrayal of Sectors
While the manufacturing sector, integral to Germany's export-driven economy, displays pessimism regarding future prospects, the construction sector exhibits its highest business climate since May 2023. Public investment and robust infrastructure spending have contributed to this improvement, offsetting some external risks.
Optimism remains selectively present in the services sector, with more positive assessments for the current situation, but caution persists in expectations, particularly in transportation and logistics.
US Trade Policy and Geopolitical Risks Loom Large
German firms voice growing apprehension over renewed tariff threats from the US, which introduce unrest in global trade dynamics, compounding unease despite some momentary resilience. The trade war with the US is regarded as putting immense stress on daily operations, with unpredictable US trade policy under the current administration viewed as a formidable challenge for the German economy.
Employment and Economic Outlook
Mirroring a restrained and sometimes negative outlook, roughly one-third of German companies are considering workforce reductions in 2025, driven by anxiety over Germany's economic future amid external pressures. While pockets of optimism can be found in services and construction, thanks to government stimulus, the overall outlook for 2025 remains subdued due to escalating global uncertainties and trade-related hurdles.
The Bottom Line
International German businesses face a challenging landscape governed by improved present conditions but mounting concerns about the future. Factors such as US trade policy and geopolitical instability significantly impact these firms, with manufacturing and trade sectors experiencing the brunt of it. Despite some resilience, the economic outlook calls for cautious optimization and careful navigation in a tumultuous global climate.
- The new Community policy, implemented by the US, is causing a great concern for German companies operating overseas, according to Volker Treier, foreign trade chief at the German Industry and Commerce Chamber (DIHK).
- The latest World Business Outlook (WBO) warns that tariffs imposed by the US are contributing to a deterioration in the economic outlook for German companies worldwide.
- The Chambers of Foreign Commerce (AHK) survey, covering over 4,600 German firms in more than 90 countries, shows that only 19% of companies anticipate an improvement in the local economy, with 33% forecasting a deterioration.
- Company chambers and finance departments are considering workforce reductions in 2025 due to anxieties over Germany’s economic future amid external pressures, such as the trade policy and geopolitical risks.
- In the Spring 2025 issue, the Chambers of Foreign Commerce (AHK) outlook report highlights the enormous impact of US trade policy and geopolitical instability on German companies, especially in sectors like manufacturing and trade.
