German firms remain optimistic for Philippine economy despite policy, labor concerns

German companies operating in the Philippines remain largely optimistic about the country’s economic prospects over the next 12 months, reaffirming its position as a key investment hub in the region.

However, businesses also pointed to persistent challenges such as economic policy uncertainties, the need for stronger legal certainty, a shortage of skilled labor, and fluctuating market demand.

According to the Fall 2025 AHK World Business Outlook Surveyconducted by the German–Philippine Chamber of Commerce and Industry (GPCCI), 47 percent of the respondents described their current business situation as positive, while 49% expect stable development in the coming year 69% foresee continued momentum in local economic development, and 51% anticipate steady investment levels. Additionally, 58% expressed confidence in the stability of the local workforce.

“German businesses continue to express continued confidence in the Philippines as a leading destination for investment and growth,” said Marie Antoniette Mariano, GPCCI president, in a statement.

‘To turn this confidence into lasting economic gains, the government must accelerate reforms that reinforce transparency, ensure policy coherence, and enhance administrative efficiency to improve the ease of doing business.”

Mariano added that, a “stable, predictable, and accountable governance environment- anchored on clarity, fairness, and trust – will further deepen investor confidence, attract high-quality long-term investments, and strengthen the Philippines’ position as a competitive and reliable partner in the region.”

While the economic outlook remains on a sustained trajectory, the survey showed that German businesses are cautiously optimistic as they navigate on-going certainties.

Economic policy conditions remain the top concern among respondents, consistent with findings from the Spring 2025 survey. Many firms cited perceived inconsistencies and unpredictability of local policies as potential risks to long-term planning and investment.

Concerns over legal certainty also grew significantly, now ranking as the second most pressing issue. Companies noted challenges related to the efficient and consistent implementation laws and regulations, particularly in taxation and bureaucratic processes.

Also a major concern is the shortage of qualified workers, as well as, tax administration, climate threats, and political challenges, which all continue to constrain productivity and expansion.

“These concerns reflect the nuanced business environment in the Philippines where optimism about growth is balanced by structural and policy-related challenges,” said Dr. Marian Majer, GPCCI Policy and Advocacy Chairperson.

“This sentiment underscores the importance of fostering a more predictable policy environment, enhancing regulatory excellence, and ensuring consistent, efficient implementation, as well as prioritizing education and workforce development to support sustained investor confidence and inclusive economic progress,” she added.

The survey also revealed that German firms have experiences minimal impact from U.S. tariffs and trade policies on their local operations. Some respondents even cited potential benefits, such as expanded trade opportunities, access to alternative markets, and increased diversification. However, firms also acknowledged other challenges such as heightened competition, rising shipping and customs costs, and pressure from trade diversion.

Respondents in the survey represented key sectors including services (60%), trade (20%), and manufacturing or construction (48%).