German Companies Show Growing Confidence and Investment Intentions Abroad Despite Domestic Slowdown

German companies are increasingly optimistic about foreign markets in 2025, even as domestic economic expectations remain weak. According to a DIHK survey, 44% of businesses anticipate improved business conditions globally, compared to just 15% who feel positive about Germany's domestic market. This optimism is driving investment and hiring abroad: 29% of companies plan to increase their investments in foreign markets, while only 16% plan reductions. Similarly, 33% expect to hire more employees abroad, with only 17% anticipating workforce cuts internationally.

Notably, in China, despite only 18% of German firms rating the current local business environment positively, 26% intend to expand investments there. This is motivated by factors such as local production mandates and access to innovation and natural resources. However, international operations are not without risks. About 48% of companies cite rising political and economic risks as major concerns, with 47% reporting weak demand. US trade policies negatively impact 44% of companies operating abroad, contributing to subdued investment plans in the US, where only 24% intend to increase investments—down from 37% the previous year.

Volker Treier from DIHK highlights challenges such as rising costs, regulatory complexities, and difficulties in market access. He urges political measures to improve global competitiveness through reliable energy pricing, streamlined processes, tax relief, and new trade agreements. Meanwhile, Germany's exports are expected to decline by 1% in 2025, with only modest recovery predicted for 2026. This data underscores the importance for German businesses to adapt to the evolving global trade environment amid domestic economic headwinds.