German firms to pull back on foreign investment, says survey

According to a report due this week from the German Chambers of Industry and Commerce (DIHK), German firms are slashing their budgets for international investment.

In comments outlining the report to the business newspaper Handelsblatt ahead of its publication, the DIHK's chief economist Volker Treier said the trend among German firms to internationalize would "slow down, at least for the time being."

The details of the poll paint a stark picture. Of the 7,000 business proprietors surveyed, 40 percent said they planned to cut back on investing abroad. Just 17 percent said they would try to expand their foreign holdings. It is the first time that the balance of those surveyed has favored slashing investment -- and that by a margin of 23 percent -- since the poll was introduced in 1995.

In particular, German firms appear most circumspect about further investment in Central and Eastern Europe.

Relatively recent EU member states like Hungary, Bulgaria, and the Baltic states could lose the most investment from Germany, as the percent of German firms expressing interest in investing there went down seven points to 30 percent, while interest in longstanding EU members in Western Europe was not affected.

Russia, as well as China and other Asian countries should see only a small reduction in German investment.