Economy German Companies in Central and Eastern Europe

| Author / Editor: Zsolt Meszaros / Lina Klass

A survey conducted by German chambers of foreign commerce conducted in 15 countries has revealed that German companies operating in the Central and East European region are feeling economically sound.

The survey shows that German companies operating in the Central and East European region are feeling economically sound in spite of difficulties.
The survey shows that German companies operating in the Central and East European region are feeling economically sound in spite of difficulties.
(Source: AHK)

The survey, which was held for the 13th time this year, involved a total of 1698 executives, mostly from companies having a German background.

Improved perception of Eastern and Central European countries

Thanks to the strong background of growth experienced in most countries, perceptions of the national economy, their own sector and enterprise, as well as the outlook for 2018 have all improved in virtually all countries when compared to the previous survey. On a regional level, the current economic situation and this year’s outlook have received the highest score since 2007, which preceded the economic crisis. This also reflects the growth rate of countries within the region, which amounted to between 3 and 7 percent in 2017 (with a few exceptions), significantly above West European rates.

Also, they typically perceived the position of their own company as more favorable than they did in last year's survey. Most participants expect this strong economic growth to be sustained in 2018. Based on high internal and domestic demand, enterprises are planning more investments and hire more staff in most countries. On a regional level, every second enterprise is expecting increasing investment expenditures and higher employee numbers.

Ongoing problems in the economic environment

The survey also provides details of the business environment quality. Satisfaction with the local economic environment only varied slightly in the whole of the region, although relatively large differences can be detected between specific countries regarding different aspects.

However, the unfavorable trend of the last couple of years continued regarding conditions on the labor market. The main source of problem for companies is the availability of skilled workforce. The labor shortage is perceived to be even more serious primarily in the Czech Republic, Hungary, Slovakia, and Bulgaria.

Several companies are also still dissatisfied with the economic policy environment, e.g. taxation, legal certainty, corruption, transparency of public procurement, and bureaucracy. Within this, especially corruption causes high levels of dissatisfaction in several countries.

By contrast, the operating environment, e.g. the supplier background or the conditions for R&D (research & development) is still considered adequate by the companies.

Despite the shortcomings in some aspects, the vast majority of companies remain committed to their current location: Four out of five investors consider their earlier location decision to be correct.

The German‐Hungarian Chamber of Industry and Commerce (DUIHK)

DUIHK is the official representative of the German economy in Hungary. With over 900 member companies, it is the largest bilateral entrepreneurial alliance in the country. Founded in 1993, its key task is the promotion of economic ties between Hungary and Germany. Its objectives and operating principles, such as the satisfaction of practical corporate needs, reciprocity, and neutrality in party politics, continue the traditions of the German-Hungarian Chamber of Commerce founded in 1920.

The DUIHK is a platform for direct corporate relation, providing end-to-end, practice oriented services and information to companies for their activities in foreign markets, representing the interests of their members, and cooperating in the continuous development of the business environment.

The DUIHK is a member of the German Chambers of Commerce Abroad (AHK), which operates in around 90 countries and in more than 130 cities throughout the world, and is the official representative of the Free State of Bavaria and Saxony in Hungary.

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