German companies operating internationally are more optimistic about their business conditions abroad compared to that in the Eurozone. ASEAN countries in particular offer great opportunities for supply diversification.
German companies operating internationally are feeling the headwinds on their business activities in nearly every corner of the globe, as shown by the latest 91大神 World Business Outlook Fall 2022 Survey results.
Responses from more than 3,100 German companies worldwide showed that the global economy would remain gloomy, mainly due to the economic consequences of Russia鈥檚 war with Ukraine and China鈥檚 Zero-COVID policy. Nearly every other company (47% of the respondents) expects an economic downturn at their respective locations. This outlook is seen in nearly all regions of the world, causing the resulting balance of better or worse assessment to drop significantly for the third time in a row, from minus 16 points in the spring 2022 survey to minus 30 in the fall 2022 survey.
Despite the pessimistic expectation for economic development, German companies are holding on. As much as 45% of the respondents reported 鈥榞ood鈥� business situation compared to the 48% in the spring survey, while another 45% reported 鈥榮atisfactory鈥� business situation. Compared to the previous survey, the balance of better or worse assessment has now fallen in line with the long-term average.
In terms of business prospects, German companies also expects their business to fare worse in 2023. But they are less pessimistic about their businesses abroad. As much as 37% of the German companies operating internationally expect improvements in their businesses, while 21% expect worse conditions. In contrast, only 8% of companies operating in Germany expect improvements, while 52% expects conditions to worsen.
This is particularly true in the Asia-Pacific region where, despite also having a weaker outlook compared to the previous survey, expectations are slightly more upbeat than in other regions across the world. This may be due to the increased attractiveness of the region as a prospective location from where German companies can diversify their supply chains.
ASEAN countries in particular seems to offer great opportunities for supply chain diversification. As reported in the Fall 2022 survey, 35 percent of the companies (previous survey: 33 percent) are planning higher investment budgets in the next twelve months, while 16 percent (previous survey: 12 percent) are lowering their investment plans. These numbers are already above the global average. Companies' employment plans are even slightly more positive than in the previous survey. On average, 22 percent of companies in the region expect an economic upswing, while 31 percent anticipate a slowdown.
In terms of risks, companies in the region see supply chain disruptions (50 percent) and exchange rate fluctuations (50 percent) as posing the biggest threats. On the other hand, in Asia-Pacific, companies particularly value the good supplier structure (40 percent), the availability of skilled workers (37 percent), and labor costs (40 percent) as the main advantages of operating in the region. Companies also particularly value the political stability and legal certainty in the countries (35 percent).
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