German firms operating abroad are more upbeat about the outlook than they were in the fall last year, but there is little sign of a “genuine boom,” an industry lobby survey published yesterday said.
The reasons for subdued confidence lie in structural challenges, such as geopolitical uncertainties, difficult financial environments due to rising interest rates, a shortage of skilled workers and rising labor costs, the German Chamber of Industry and Commerce’s (DIHK) World Business Outlook said.
Europe in particular is at a competitive disadvantage because of high energy prices, according to the survey of 5,100 German companies with operations abroad.
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Instead of the healthy upturn that was expected after three years of global crisis, companies see only a modest recovery, DIHK said.
Even though positive business expectations in China remain intact, the discussion about a decoupling of the global economy is leading to a slight dip, Volker Treier, the head of DIHK’s foreign trade board, said in Berlin.
Two-fifths of German companies in China expect a decent upswing in the next 12 months, while 19 percent expect a weaker economic trend.
However, 29 percent of firms regard their business situation as good, while 22 percent see it as poor: This is a worsening trend compared with the fall survey, in which 32 percent described their situation as good and 18 percent as poor.
“Uncertainties surrounding future trade relations with China are also weighing on our local businesses,” Treier said. “The discussion about decoupling, that is breaking away from the Chinese market, is a blight on the China business of companies active there.”
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