German businesses expecting ‘more challenging’ conditions

A MAJORITY of German businesses active in the Philippines expect more challenging economic conditions in the next 12 months as global energy prices and supply chain pressures cloud the outlook, the German-Philippine Chamber of Commerce and Industry (GPCCI) said.

“While business operations in the Philippines remain stable for our member companies, our latest survey shows that strategically, companies are becoming more cautious on investments and hiring amid rising global uncertainties and cost pressures,” according to Marian Norbert Majer, GPCCI Policy and Advocacy Committee chairman, said in a statement.

In its Spring 2026 AHK World Business Outlook Survey, 51% of German businesses in the Philippines expect more challenging local economic conditions over the next 12 months.

Only 9% expect conditions to improve over the period, GPCCI said.

Energy prices (cited by 65% of respondents) were the top concerns of German firms, reflecting their exposure to geopolitical uncertainties and supply shocks caused by the Iran war.

Supply chain disruptions (49%) and raw material costs (47%) were also singled out as areas of concern, the GPCCI said.

Companies are most concerned about the conflict’s impact on input costs (85%), supply chain disruptions (62%), and difficulties with staff deployment overseas (6%).

“While operations remain stable, rising global tensions and cost volatility are weighing on business confidence,” the group said.

While most German firms (57%) report stable conditions, sentiment is growing more cautious. Meanwhile, 34% reported improvements, while 9% said conditions have worsened.

Growth expectations have also softened, with only 31% expecting improvement, and 18% expecting worse conditions.

About 34% of German firms expect to recalibrate their Philippine investments in the next 12 months. Only 25% plan to invest more, while 31% expect to keep investment stable.

Employment is also expected to soften as German firms grow cautious, GPCCI said.

While 53% expect stable employment levels, only 25% plan to increase hiring, and 22% are looking to adjust workforce levels.

Geopolitical uncertainties have pushed firms to diversify externally. Around 70% of German firms are expanding or planning supplier networks, and 79% are exploring new markets. Meanwhile, 75% have no plans to relocate in the face of external shocks.

Nearly half of respondents reported that US trade policies are not directly relevant to their business.

“Among affected firms, responses favor maintaining the status quo or shifting focus to domestic and established markets, rather than expanding US engagement,” the GPCCI said.

The GPCCI surveyed about 3,200 German companies, with 68 operating in the Philippines, between March 16 and April 10. — Beatriz Marie D. Cruz