By Maria Martinez
BERLIN (Reuters) - German exports are expected to stagnate this year, following a 1.8% decline last year, the German Chamber of Commerce and Industry (DIHK) said on Tuesday.
Although there are signs of a slight upturn in the global economy, companies are not benefiting from it enough because of political uncertainty and geopolitical risks, the Chamber's regular AHK World Business Outlook suggested.
"The weak development of German foreign trade at the turn of the year and the slight improvement in business expectations and investment intentions point to a challenging year, despite small rays of hope," Volker Treier, DIHK head of foreign trade, said.
The German economy is highly trade-oriented and therefore sensitive to international events that weaken foreign demand.
German companies with activities abroad were increasingly optimistic about global economic developments, the DIHK survey showed.
Of the 4,300 companies surveyed, 31% expected an economic upturn at their overseas locations in the current year, boosted by slowing inflation rates and the hope of interest rate cuts.
In the last survey in November, the figure was 22%.
One in five companies still anticipated an economic slowdown, compared with 28% in the previous survey.
"There are signs of an upturn on many global markets. This gives many companies hope that the mood will improve again," Treier added.
"However, the improved economic expectations are not yet materialising in an equally strong revival in international trade - and therefore also in the business of German companies locally," he added.
EXPECTATIONS DETERIORATE IN CHINA
While companies were more upbeat about their foreign-based operations, their expectations for China deteriorated once again.
The continuing weak demand in the Chinese economy was seen as a business risk by 80% of the companies.
"The increasing competitive disadvantages compared to Chinese firms, particularly in terms of market access, contacts with authorities or in obtaining information for public tenders represent a burden for German companies," Maximilian Butek, chief representative at the DIHK delegation in Shanghai, said.
Companies were more optimistic about business opportunities in other parts of the Asia-Pacific region, which remains an important destination for the diversification of supply chains.
Firms had not seen any improvement in their situation in the eurozone from November and business expectations for the coming twelve months remained below the global average, according to the survey.
In the U.S., companies are much more concerned about uncertain economic policy conditions and, above all, trade barriers that could start in November.