German exporters are showing surprising optimism for the current year, notwithstanding the conflict in the Middle East and ongoing trade disputes with the US. According to a survey released Wednesday by credit insurer Allianz Trade, more than eight out of ten companies (83 percent) anticipate an increase in export revenues. This puts German firms ahead of the global average of 75 percent. Most German businesses expect moderate growth of between two and five percent. The study surveyed approximately 6,000 companies across 13 markets during February and March.

At the same time, US trade policy is weighing on sentiment. Nearly half of German firms expect negative repercussions by 2026, reflecting a more pessimistic outlook than in the immediate aftermath of the conflict's onset. "In light of the trade war and the escalation in the Middle East, geopolitical uncertainty (67 percent) is unsurprisingly once again the top risk keeping German exporters awake at night, followed by supply chain risks," said Björn Griesbach, senior economist at Allianz Trade. Furthermore, nearly half of German exporting companies anticipate a deterioration in payment behavior (47 percent) and an increase in payment defaults (40 percent).

"STOCKPILING IS BACK IN VOGUE"

Companies appear to have adapted to these uncertainties as the "new normal." Since the trade dispute began, 80 percent of German firms have adjusted their trade and supply chain routes. In response, many are focusing more heavily on geopolitically aligned countries, a strategy known as "friend-shoring" (52 percent), as well as developing new products (51 percent). To cushion the impact of supply chain shocks, 60 percent of businesses are expanding their inventories, and more than half (55 percent) are seeking new suppliers. "Since the trade war began, stockpiling is back in vogue," Griesbach noted.

The trade conflict has already shifted global trade flows. The US has lost some of its appeal as an export market, with only twelve percent of German firms still viewing it as a growth market. Instead, Europe and Asia are coming into sharper focus for future business. While China's allure as an investment destination has declined globally, German firms remain somewhat more interested (28 percent) than the global average. Simultaneously, 14 percent of German companies are planning an active withdrawal from the People's Republic.

(Report by Klaus Lauer; edited by Reinhard Becker. For inquiries, please contact our editorial office at berlin.newsroom@thomsonreuters.com (for politics and economics) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)