Although Germany is known to be an attractive country for investments the inflows of FDI decreased by nearly 50 % in 2019 from USD 74 billion in 2018 to USD 36.6 billion in 2019. These figures have recently been published in the 2020 World Investment Report by UNCTAD. There were several reasons for this steep decline ranging from the uncertainty caused by the Brexit, a tight labour market to the stagnation in the automotive industry.
According to the latest data of the OECD the list of foreign investors is led by the Netherlands, followed by Luxemburg, the US and the UK. High investments were also made by Switzerland, France, Italy, Belgium, Austria, Japan, Spain and Denmark.
The most attractive industries for investments remain manufacturing and trade, finance and insurance, information and communication as well as the real estate business.
Although foreign direct investments will be under severe pressure in 2020 due to the COVID-19 pandemic there seems to be some light at the end of tunnel. After all, there has been significant financial support for businesses in Germany combined with regulatory facilitations that helped ease the consequences of the economic downturn. In this context especially innovative industries should benefit for example from the two-billion-euro aid package especially for start-ups and the stimulus money for electric vehicles, charging infrastructure and green hydrogen.
Together with the status of Germany as the biggest economy in Europe with a high productivity, excellent workforce and a good infrastructure and healthcare system these measures should soon contribute to a return to a high level of foreign direct investments. According to experts an end of the recession could be expected for Germany within the current quarter.
If you are considering an investment in Germany, our specialized dhpg Inbound Services team would be pleased to support you with our expertise.