Markets Exporters pessimistic after Corona crisis
80 % of German companies expect to lose sales revenue from foreign business in 2020. As a consequence, a reluctance to invest is growing in then affected companies.
German companies abroad are feeling the full force of the effects of the corona pandemic, the DIHK (German Chamber of Industry and Commerce) concluded in its Spring Outlook, in which more than 4,000 German companies around the world have participated. Not only are 80 % of the companies already expecting heavy sales losses due to the corona crisis; 15 % of those surveyed even expect their sales to be more than halved. “The figures are frightening because they show how hard the Corona pandemic is hitting German companies around the world in particular,” comments DIHK foreign trade chief Volker Treier on the results.
According to the survey, the business situation and business expectations of German foreign companies are collapsing dramatically. This also applies to economic expectations: Two-thirds of the companies expect the economic situation in their region of the world to deteriorate compared to the previous survey, while only 10 % expect the local economy to improve.
“We can see that the fight against the Coronavirus is affecting economic life around the globe,” says Treier. The economic consequences of the crisis are therefore not yet fully foreseeable.
The biggest risk for companies in the coming twelve months is the demand for goods and services. After around half of the companies in the preliminary survey in autumn 2019, more than two thirds now see this as a major challenge for the further development of their business. However, the economic policy framework and the issue of financing — due to many business failures and the current high and growing need for liquidity — are also high business risks for German companies abroad.
Companies in the USA and Europe assess their own business development as particularly poor; within Europe, a full 88 % of companies in Spain and Croatia expect a downturn. By contrast, business expectations in China are somewhat more positive: here only 49 % expect an economic downturn. “It is possible that companies there assume that the peak of the corona pandemic is already behind them,” explains the DIHK foreign trade chief. In Africa/Middle East and the Asia-Pacific region, too, the proportion of companies with negative economic expectations is only 54 and 68 % respectively. The proportion of companies here that expect business to remain stable is 35 and 26 % respectively. As a direct consequence of the Corona crisis, 69 % of those surveyed cite restrictions in passenger transport, while 45 % see problems in supply chains and logistics. 58 % report lower demand for their products and services; 47 % have to cancel or reduce investments.
In addition, more than half of the companies, more than ever before, want to reduce their investments. Even before the corona virus crisis, companies were already reluctant to invest because of the many uncertainties around the world due to trade conflicts, sanctions and the breakeven, with the result that investments were postponed or cut back. This reluctance has now become much more acute, as the DIHK notes. As a result of the slump in sales due to the Corona crisis, one third of German foreign companies also see financing and liquidity problems rolling in.