Global Economy in Transition: Confidence of German Companies Abroad Is Growing
After the setback caused by U.S. tariff policies in the spring, the outlook in many world regions is noticeably improving. This is shown by the latest AHK World Business Outlook from the Deutsche Industrie- und Handelskammer (DIHK), based on more than 3,500 responses from around 90 countries worldwide. While business expectations in Germany remain subdued, German companies at their foreign locations are significantly more optimistic. “International markets are a stabilising anchor for many companies,” says DIHK Head of Foreign Trade Volker Treier. “They are proving that they can compete there – even though Germany as a business location currently offers them very little tailwind.”
Worldwide, 44 percent of companies expect better business – compared with only 15 percent domestically. The upswing remains fragile, but the direction is clear: growth is happening beyond Germany’s borders. This is also reflected in investment and employment plans. Abroad, 29 percent of companies want to increase their investments, while only 16 percent plan cutbacks. In terms of staffing, 33 percent intend to expand, while 17 percent expect reductions. In Germany, however, the companies planning to downsize far outnumber those planning to expand.
Many companies are responding to changing political and economic conditions and are relocating their investment decisions to places where demand is growing – and increasingly to where market access is tied to local value creation. This is particularly evident in China: Only 18 percent of German companies rate their current situation there as good, yet more than a quarter (26 percent) plan to expand their investments – significantly more than in the spring. This is happening partly because market access is tied to local production, but also to leverage China’s considerable innovative strength and access to raw materials to position themselves in global competition.
At the same time, risks in international business continue to rise. Nearly half of companies (48 percent) cite economic policy conditions as a business risk, and 47 percent complain of weak demand. Added to this are increasing exchange rate risks (31 percent) and new trade barriers (25 percent). “International division of labor is no longer a given. Market access increasingly has to be fought for politically – those who bear excessive costs or are slowed down by regulation lose market share. The global economy is trying to find a new equilibrium – but this ‘new normal’ works against us for now: global markets are being shaped by power politics, not automatically opened. In any case, those who do not secure their competitiveness will be pushed aside.”
U.S. trade policy also continues to have a global impact. The initial uncertainty caused by the erratic and burdensome measures from Washington has now given way to a phase of sobering and strategic adaptation. Forty-four percent of German companies at their foreign locations report negative or strongly negative effects – from tariffs and export controls to local-content requirements. Although the willingness of German companies to invest abroad has recovered since the tariff shock in the spring, there is still no investment boom. This is especially true for German companies’ investment plans in the United States itself. There, plans remain below the international average and significantly lower than a year ago: while currently only 24 percent plan additional investments in the U.S., the figure was still 37 percent in autumn 2024.
Germany’s weak economic momentum has a direct negative impact on export expectations. After three consecutive years of decline, the DIHK also expects a one-percent drop in 2025. Only in 2026 is a slight increase of 0.5 percent anticipated. Germany will therefore benefit only to a limited extent from global growth.
Treier calls for decisive political action: “The rules of global trade are being rewritten – and those who do not secure market access through robust trade agreements or who remain structurally too expensive will lose out. This is not about isolation, but about maintaining connectivity. Germany and Europe must strengthen the competitiveness of their companies in a targeted way: through reliable energy prices, faster procedures, tax relief, and new trade agreements. Only then can our companies once again participate in global growth – and help shape it, instead of running behind it.”