German Media: Dream of Recovery Shattered? Middle East Conflict Has German Firms "Breaking Down Mentally"

The war in Iran has dealt a heavy blow to German companies' business operations in the Middle East. Recent surveys show a cliff-like decline in confidence among enterprises active in the Gulf region. In contrast, prospects for businesses in China and the U.S. appear more optimistic.

"The hope for economic recovery has already been shattered," Volker Treier, head of foreign trade affairs at the German Chamber of Commerce and Industry (DIHK), said this week while referring to a new survey. "The global economy is now in crisis mode, and companies are feeling it immediately."

The most severely affected are German firms operating in the Gulf region—companies running operations in Saudi Arabia, Kuwait, Israel, Qatar, or the UAE. Their assessments of current business conditions have plummeted sharply. Due to Germany's reliance on energy imports from the Middle East, confidence among German businesses in India or Sri Lanka has also significantly deteriorated.

DIHK evaluated feedback from over 4,500 companies engaged in international business. The results show that only 21% of companies expect economic conditions in their overseas markets to improve over the next 12 months, while 32% anticipate worsening conditions.

Treier stated: "This is not merely a matter of weak economic sentiment; uncertainty is becoming the dominant factor." The recent conflict in the Middle East has weakened growth prospects, and soaring oil prices have already fueled inflation—but according to DIHK, this impact has not yet fully materialized across all regions.

Bankruptcies Among Western European Companies Hit Record Highs

Currently, 39% of surveyed firms rate their own business conditions as good, 48% consider them acceptable, and 13% describe them as poor. Compared to the previous survey conducted in autumn 2025, this result shows even slight improvement. German companies conducting business in China and the U.S. have seen a rebound in confidence, with more optimistic outlooks.

Nearly half of the companies expect business at their Chinese subsidiaries to improve, while only 7% anticipate deterioration. In the U.S., nearly half also expect improved business performance, though 15% still foresee a downturn.

At present, 46% of firms identify high energy prices as their primary business risk—more than double the proportion recorded in autumn 2025. Additionally, 40% view supply chain disruptions as a major risk factor, and 37% cite rising raw material costs.

As a result, many companies are adopting cautious attitudes toward investment. Only 31% expect to increase investment over the next 12 months, while 22% anticipate reducing it. Similar trends are evident in workforce planning: 31% plan to expand their staff, whereas 16% expect to lay off employees.

Source: Reuters, DW

Original article: toutiao.com/article/1864856152813642/

Disclaimer: The views expressed in this article are those of the author alone.