German firms express confidence in Sri Lanka despite global economic headwinds
Daily FT: German companies operating in Sri Lanka have expressed a notably optimistic outlook for the year ahead, signalling confidence in the country’s economic prospects despite ongoing global economic headwinds according to the Spring 2025 AHK Business Barometer unveiled last week by the Delegation of German Industry and Commerce in Sri Lanka (AHK Sri Lanka).
The survey, based on responses from 54 German-affiliated businesses in Sri Lanka, revealed that 54% rated their current situation as “good,” with none reporting a negative outlook.
Looking forward, 66% of respondents expect business conditions to improve over the next 12 months, while 32% anticipate stability, leaving only one company predicting a decline in business performance.
The findings presented by AHK Sri Lanka Chief Delegate Martin Klose at a high-level Breakfast Dialogue in Colombo, reflect a ‘cautiously optimistic’ sentiment among German firms despite ongoing global economic uncertainties.
Citing the survey, Klose said this positive sentiment stands in stark contrast to the broader global scenario, particularly in Germany, where companies are grappling with shrinking GDP forecasts, weak demand and rising labour costs.
He said as per the survey, at home, German firms are reporting declining exports and investment intentions, coupled with pessimism about job growth. However, the Sri Lankan context appears to challenge that trend.
The survey reveals that 33% of German businesses plan to increase their local investments in the coming months, while 48% intend to maintain existing investment levels. On the employment front, 31% of companies reported plans to expand their workforce, with a further 63% aiming to retain their current employee numbers.
OSL take:
The expression of confidence in Sri Lanka by German firms serves as an overall vote of confidence in Sri Lanka’s growing economy as well as in the country’s growth as an emerging business destination in the South Asian region. While Sri Lanka’s geographical positioning in the Indian Ocean and the strong trade ties enjoyed with many foreign countries have attracted foreign businesses/investors to explore the expanding business/investment opportunities in Sri Lanka, the ongoing economic activities have added to the country’s attraction among foreign businesses/investors. It is in such a backdrop that a group of German businesses have expressed confidence in Sri Lanka. Given that Sri Lanka is on an overall expansion path in the region, German businesses/investors could confidently explore the expanding business/investment opportunities in Sri Lanka and also look at setting up bases in Sri Lanka to enrage with other countries in the region using the preferential treatment enjoyed by Sri Lanka with them. Also, local businesses could explore the possibilities of expanding operations through collaborations with German businesses.
| Article Code : | VBS/AT/20250704/Z_4 |