AHK – World Business Outlook, Fall 2023

The AHK World Business Outlook Fall 2023 reveals that German companies are expanding their global engagement despite facing a cooled economic climate at their international locations. The report gathered assessments from over 3,600 German companies. While 22% of companies expect better economic development at their locations, 28% anticipate a downturn. However, German companies abroad are more optimistic compared to those in Germany, as they face fewer structural challenges and benefit from favorable investment conditions. The demand weakness in China and geopolitical risks negatively affect the businesses of globally operating German companies. Companies in Europe report a relatively good business situation currently, but their future expectations are more pessimistic due to factors such as the weakening German economy, a shortage of skilled workers, and high bureaucracy. On the other hand, companies in North America consistently express optimism with positive business conditions. In the Asia-Pacific region and South and Central America, companies are very optimistic about their business development. Low demand is the main business risk globally, while risks related to restrictive monetary policies have slightly increased. Despite global crises and structural problems at home, German companies operating abroad are increasing their investments. One-third of companies plan to increase investments in the next twelve months, particularly in North America, the MENA region, and the Asia-Pacific region. However, companies in Europe and China are more cautious. The difference between domestic and foreign investments highlights the need for reliable and attractive conditions in Germany. Market size, market entry, proximity to customers, and localization are the main reasons for foreign investments for many companies. Diversification and investment incentives also play a role for some companies.