German-affiliated companies in Sri Lanka are expressing renewed confidence in the country’s economic trajectory, despite facing turbulent global economic conditions, according to the Spring 2025 AHK Business Barometer released by the Delegation of German Industry and Commerce in Sri Lanka (AHK Sri Lanka).
The survey, based on feedback from 54 German-linked businesses operating in Sri Lanka, revealed that over half (54%) described their current business situation as “good,” with none reporting a negative assessment. A strong 66% anticipate improved business conditions over the next 12 months, while 32% expect stability—leaving only one respondent forecasting a downturn.
These findings were presented by AHK Sri Lanka Chief Delegate Martin Klose at a high-profile Breakfast Dialogue event in Colombo. Klose noted that German companies in Sri Lanka are demonstrating “cautious optimism,” especially in contrast to the prevailing sentiment back home in Germany, where firms are grappling with stagnant growth, weak demand, and escalating labour costs.
Klose emphasized the contrasting outlooks, stating that while German firms in Europe face shrinking GDP forecasts and declining investment appetite, their counterparts in Sri Lanka are showing readiness to expand. According to the survey, 33% of German businesses in Sri Lanka plan to increase local investment, and 48% aim to maintain current levels. Furthermore, 31% intend to expand their workforce, and 63% expect to retain their current staffing—indicating a relatively stable employment outlook.
However, companies also identified a number of structural challenges. Chief among them is the shortage of skilled labour, highlighted by 47% of respondents. Other concerns include weak local demand (26%), tight financing conditions (25%), and rising labour costs. These issues are common across many emerging markets and are being closely monitored by German businesses in Sri Lanka.
Geopolitical concerns also loom large. A significant 71% of the companies surveyed believe evolving U.S. trade policies will negatively impact their operations in Sri Lanka, although the expected severity varies among firms. Long-term strategic challenges such as global economic fragmentation, climate change, supply chain restructuring, and the energy transition were also identified as critical factors for future business planning.
The survey also shed light on the business composition: nearly 50% operate in the trade sector, with the rest engaged in manufacturing, construction, and services. About 70% are subsidiaries or branches of German firms, and 39% represent companies employing over 1,000 people globally.
The event concluded with a panel discussion featuring B. Braun Lanka’s Managing Director Dr. Nathalie de Dieuleveult and Allianz Insurance Lanka CEO Prashant Grover, who shared insights on adapting to global challenges, workforce strategies, and aligning with sustainability goals.
