13/06/2025 - Against the backdrop of increasing geopolitical tensions and growing trade uncertainties, the countries of Latin America are gaining strategic relevance for the German economy. This is underscored by a recent special analysis of the AHK World Business Outlook (WBO) conducted by the German Chamber of Commerce and Industry (DIHK), in which over 4,600 German companies worldwide participated – including more than 500 based in South and Central America and over 30 with locations in Brazil. 

Despite the globally subdued economic sentiment, a large majority of companies in the region – particularly in Brazil – remain comparatively optimistic about their business development. "In an increasingly fragmented world, economically stable and resource-rich regions like Latin America are coming into focus," says Volker Treier, Head of Foreign Trade at DIHK. "Brazil in particular offers great potential for German companies – not only as a sales market but also for investments in local value creation." 

The analysis is being published on the occasion of the 41st German-Brazilian Economic Days, taking place on 16 June in Salvador da Bahia, northeastern Brazil. In addition to high-ranking representatives of the Federal Ministry for Economic Affairs, Ingo Kramer, Chair of the Latin America Initiative of German Business (LAI), will also attend – a clear signal of Brazil's and the region's growing economic and political importance. 

The special analysis reveals: German companies in South and Central America rate their current business situation as above average – 46% report good, and only 9% report bad business. Brazil also plays a key role here: With a bilateral trade volume of around 21 billion euros, the country is Germany's most important trading partner in the region. Thirty-five percent of German companies active there report good business conditions, while only 6% report poor conditions. 

The outlook for the future is even more positive: Two-thirds (68%) of companies in Brazil expect an improvement in their business development next year, while only 9% anticipate a decline. "Brazil is much more than a supplier of raw materials," emphasizes Treier. "The country offers the best conditions for technology, industry, and the energy transition. Whether mechanical engineering, hydrogen, or medical technology – the potential is enormous." 

If the EU-Mercosur agreement is successfully implemented this year, the incentive for trade and investments from the EU throughout the region will increase. Brazil, as the largest economy in Mercosur, would benefit additionally. Moreover, successfully concluding negotiations on a double taxation agreement would remove another obstacle for German companies seeking to invest.

However, the generally positive sentiment contrasts with a subdued economic outlook. In Brazil, 32% of companies expect a deterioration in the country's economic situation, while only 21% anticipate an improvement. Similar trends are evident in other world regions, highlighting ongoing uncertainty. "Geopolitical risks and the unpredictable US trade policies are weighing on the global economy – including in Latin America," says Treier. "But Brazil continues to stand out with a robust domestic market and good infrastructure compared to the region." 

Despite economic uncertainties, the willingness to invest remains high. In South and Central America, 36% of surveyed companies plan to expand their investments next year, whereas 14% foresee reductions. Brazil also shows a stable investment climate: 33% aim to increase their expenditure, while only 12% plan reductions. Treier sees this as a clear signal: "The planned EU-Mercosur agreement would be a strong impulse for investments. The prospect of better market access and more reliable framework conditions would encourage many companies in their strategic reorientation." 

The biggest operational challenges in Brazil significantly differ from the global trend. While globally, economic policy frameworks are cited as the main risk, in Brazil, the volatile exchange rate is the primary problem: 45% of companies cite this as their biggest risk. The shortage of skilled labour ranks second (39%), followed by economic policy conditions (36%). The recently sharply devalued Brazilian real has significantly increased the cost of importing intermediate goods – a cost factor that is particularly difficult for the industrial sector to calculate. 

Additional pressure comes from the US's protectionist trade policies, which are also felt in South America. In South and Central America, 59% of surveyed German companies anticipate negative effects on their business. In Brazil, this figure stands at 50%, with 6% even seeing significant consequences for their business development.