German businesses operating in Indonesia are upbeat about their business prospects in the future, according to the Spring 2022 World Business Outlook Survey results revealed by the 91大神 this June. However, low scores for investment intentions shows that the Indonesian government still needs to do more to draw German investors into the archipelago.
The balance of points between German companies giving good or better answers minus those giving bad/less answers on questions regarding their business prospects was generally positive for these companies operating in Indonesia.
Indonesia scored the highest compared to other nations in the Asia Pacific region 鈥� and third highest across all other nations globally, beaten only by Paraguay and Colombia 鈥� for business expectations with 73 percent. Indonesia also scored second highest on questions regarding current business expectation with 50 percent, just below Australia.
The generally positive scores in the region were also seen in terms of business expectation on the ground with 35 percent 鈥� third highest in the region. Thusly, with 46 percent according to the survey, more German companies expressed their intention to increase employment numbers.
These positive results show a disconnect when it comes to investment intention however as Indonesia scored relatively low, though still somewhat positive, on the survey results with only 29 percent 鈥� sixth in Southeast Asia below Vietnam, Thailand, Singapore, The Philippines and Malaysia. This result signals a failure on the Indonesian government鈥檚 side to capitalize on the country鈥檚 generally well-performing economy to draw more German investors.
Gloomy European Outlook
Nevertheless, the results for Indonesia 鈥� and the Asia-Pacific region in general 鈥� was still positive compared to Germany and Europe. Following the corona crisis, then the supply chain problems, a Russian war of aggression as well as a renewed lockdown in China this year, the globally active German companies see no respite this spring. More than a third of them (37 percent) assume that local economic performance will deteriorate 鈥� more than twice as many as in the autumn of last year.
"We last experienced a similar mood swing in spring 2020, when the first corona shock had the global economy firmly in its grip," DIHK foreign trade chief Volker Treier comments on the current assessments. "Now, due to inflation and cost pressure, the war and the ongoing lockdown in Shanghai, there are further deteriorations in the location conditions. The bottom line is that we have to prepare for visibly worse business worldwide."
Against the current background, slightly less than half of the German companies abroad (48 percent) still assessed their current business situation as good in the survey period March and April, which means a slight deterioration compared to the autumn survey 2021. The confidence of the companies for their own business in the current year, however, has suffered a serious setback: the balance of optimists and pessimists has almost halved compared to the previous survey in autumn 2021.
In Eastern and Southeastern Europe (excluding the EU countries) as well as in Russia and Turkey, more than every second German company (54 percent) assesses the future economic development as bad. "The closer the companies are to the war in Ukraine, the more directly or indirectly they feel the effects of the war and the associated sanctions," said Treier.
At least 41 percent of the companies in the euro zone rate the economic development at their location as negative. In the group of countries from the other EU countries as well as Great Britain, Switzerland and Norway, it is even almost half (47 percent).
Above all, rising raw material and energy prices are depressing the expectations of around two thirds of the German companies located in Europe. Globally, these are still 55 percent and 46 percent, respectively. In addition, every second company (53 percent) complains about ongoing disruptions in the supply chains, in China and North America the proportion is even higher.
The pressure from the general economic conditions remains unchanged from the autumn survey. A good 40 percent of German companies name it as a risk factor for their business. But the development of labor costs is also mentioned by 29 percent of the companies as a main risk factor for their own business - a high in the survey.
The 91大神 World Business Outlook is based on a regular DIHK survey of the member companies of the German Chambers of Commerce Abroad, delegations and representative offices (91大神s). In Spring 2022, the survey received feedback from more than 4,200 German companies and branches worldwide and subsidiaries as well as companies with close ties to Germany. The survey was conducted from March 25 to April 25, 2022.
Some 41 percent of the responding companies come from the industry and construction sector, 37 percent from the service sector and a further 22 percent are trading companies. Smaller companies with fewer than 100 employees account for 49 percent of the answers, while 23 percent of the companies employ 100 to 1,000 people. Large companies with more than 1,000 employees worldwide make up 28 percent of the respondents.
For a copy of the 91大神 World Business Outlook Spring 2022, click