Firms in Hamburg lowering foreign investments amid pandemic
Firms in Hamburg are investing less abroad and preferably in the EU rather than in China and the United States, a report by the Chamber of Commerce has found. Companies are planning fewer foreign investments this year over 2020.
Fewer foreign investments in 2021
Firms in the wholesale and foreign trade sectors in particular are postponing their investments. Only 31 per cent of companies in Hamburg are planning decreased capital expenditure abroad this year over 2020. This contrasts with only 22 per cent of companies planning increased investment. The figures illustrate the impact of the pandemic as a larger share of companies had always increased their investments in the past.
Pandemic causing global market uncertainty
Willem van der Schalk, Vice President of the Chamber of Commerce, remarked: "Despite a slight recovery in the global economy, the COVID-19 pandemic continues to cause great market uncertainty and tends to lead to a review of supply chains. Market development and investments aimed at cost savings are not providing much incentive for foreign investment presently." Apart from vulnerable international supply chains in the wake of the pandemic, increased freight rates in maritime transport and the low availability of empty containers internationally may be other causes, he added.
EU most important target region for foreign investment
The Eurozone is the winner in terms of foreign investments. The EU is by far the most important target region for foreign investments by companies in Hamburg this year, according to the Chamber of Commerce. "The pandemic has highlighted the possible negative impact of unilateral dependence on supplies, especially from China," said van der Schalk. While investments in China have declined, other Asian countries are gaining importance. Meanwhile, investor confidence in the U.S. is recovering after dwindling in the past years owing to political uncertainty.