03.06.2025 - The German economy in Asia-Pacific is recovering from the downturn of last autumn – yet the headwinds remain noticeable. The business situation of German companies in many countries of this economic region is slightly improving, but the outlook remains cautious. This is shown by a special evaluation of the AHK World Business Outlook from spring 2025 for the Asia-Pacific region. The assessments of more than 900 companies with a connection to Germany show: The region remains immensely important, but geopolitical pressure is increasing – and the predictability of business activities is becoming more challenging. Asia-Pacific is of outstanding importance for the German economy: Around 40 percent of Germany's foreign trade outside the EU is now in this region – more than with all of America combined. By comparison, the entire non-European trade with North, South and Central America is only 26 percent. “The Asian market remains a strategic future market for many companies – but the environment is getting tougher,” warns Volker Treier, head of foreign trade at the German Chamber of Commerce and Industry (DIHK). “Geopolitics, economic policy uncertainty and new trade barriers are driving many companies to halt investments or even withdraw.”

In Asia-Pacific outside the Chinese economic area (also called Greater China), 38 percent of companies currently report a good business situation – three percentage points more than in autumn 2024. At the same time, the proportion of negative feedbacks has continued to decline, with 15 percent. Thus, a noticeable, albeit cautious, recovery is evident.

Particularly positive is the picture in Sri Lanka (54 percent good) and in the Philippines (58 percent good). In South Korea (17 percent good, 36 percent poor) as well as in the People's Republic of China (25 percent good, 29 percent poor), however, restraint and skepticism prevail.

Businesses in Greater China, i.e., in the People's Republic of China, Hong Kong, and Taiwan, are even more pessimistic. Only 25 percent report a good business situation, 27 percent rate it as poor – a slight deterioration compared to autumn. The outlook also remains cautious: Only 27 percent of companies in this sub-region expect an improvement, while 16 percent expect a deterioration.

The outlook appears somewhat more optimistic in the rest of the region: The proportion of optimistic companies is remarkable at 49 percent – even though it is slightly down compared to autumn. Overall, positive expectations generally outweigh the negative ones. Especially in India and Sri Lanka, around two-thirds of companies anticipate better business. Optimism also persists in the Philippines, with 65 percent expecting improvement over the next 12 months, while only three percent of companies foresee a deterioration in their business.

Risk shift: Trade barriers and politics alongside demand 

While weak demand was cited as the biggest danger by 51 percent of companies outside China last autumn, this figure has now fallen slightly to 49 percent. Thus, the demand theme still tops the risk list, but its significance is somewhat decreasing – possibly a sign that sales markets in parts are stabilizing.
Other risks, however, are moving more into focus: Currently, 37 percent of companies outside Greater China rate trade barriers as a risk, compared to 23 percent in autumn 2024. Economic policy uncertainties in these areas increased by 7 percentage points to 44 percent, reflecting the ongoing nervousness in the region. Exchange rate fluctuations are also seen as a central business risk by 41 percent of companies.
“We see a clear shift in risk perception – away from market developments towards politically and monetarily motivated disruptions,” said Volker Treier. “Especially trade barriers and political interventions are noticeably changing the rules of international business.”
The risk perception in Greater China is even more nuanced: The trade conflict between the USA and the People's Republic of China casts its shadow. Here, weak demand remains the most frequently mentioned risk at 71 percent. Trade barriers are cited as a business risk by 43 percent locally – an increase of 3 percentage points compared to autumn 2024.

Investments and employment: South and Southeast Asia lead
In India, 53 percent of companies currently plan to expand their investments locally. In the Philippines, this proportion is 44 percent. Investment willingness also remains high in Vietnam (38 percent) and Sri Lanka (33 percent). Companies in the People's Republic of China are much more cautious: Only 16 percent want to invest more there, while 33 percent are planning cutbacks. A similarly negative picture emerges in South Korea, where only 17 percent are planning increased investments.

Clear differences also emerge in employment intentions: In India, the Philippines, and Malaysia, over 40 percent of companies want to create new jobs. In South Korea, however, a quarter of companies are planning job cuts.

US trade policy intensifies uncertainty
Particularly, U.S. trade policy with potential countermeasures from affected countries burdens the mood in companies of the region. In markets outside China, 61 percent of companies expect negative effects on their activities, while in Greater China, this figure rises to 72 percent. The 'Liberation Day' announced by the U.S. government in early April 2025, with the introduction of new punitive tariffs, has created significant uncertainty. In Singapore, 93 percent of companies expect impacts, and in South Korea, the figure is 89 percent. “The 'Liberation Day' had an actual booster effect on the negative responses of companies,” said Treier. “The expectation of a new escalation level in the global trade conflict has now become a reality in many places.”

Global challenges: Fragmentation and barriers dominate
Looking ahead, one theme dominates: trade barriers. In almost all markets, they rank among the biggest challenges for the next five years – especially in Singapore (89 percent), China, and India (over 80 percent each). Geopolitical fragmentation and the need to broaden supply chains are also central. In Greater China, 71 percent of companies see so-called 'de-coupling' as a pressing problem. “Global markets are fragmenting – and companies must strategically realign their supply chains and locations,” Treier summarizes. “This requires time, capital, and political planning security – both of which are currently in short supply.”

Indonesia in focus – 100 years of EKONID 
Indonesia is developing into an anchor of stability for the German economy in a turbulent region. 36 percent of companies on-site report a good business situation, and nearly half look optimistically to the future. The country also ranks at the forefront of the region in terms of investments.

A strong sign of the growing partnership: On June 4, the AHK Indonesia (EKONID) in Jakarta celebrates its 100th anniversary. With over 400 members, it is today the largest European chamber in the country – and an important bridge-builder between the two economies. Accompanied by DIHK President Peter Adrian, new partnerships with Indonesian partners will be initiated as part of the anniversary celebration – a clear commitment to the future of the site.