Germany's foreign direct investment (FDI) inflows fell for a fourth straight year. Although the German government has put restoring industrial competitiveness at the top of its agenda, foreign capital investment in Germany is instead declining rapidly.
Germany Trade & Invest (GTAI), under the Federal Ministry for Economic Affairs and Climate Action, said on the 22nd (local time) that the number of FDI projects in Germany last year was 1,564, down 9.3% from the previous year.
Investment amounts fell by an even larger margin. Total FDI last year came to 11.8 billion euros (about 20.7 trillion won). Compared with 2024's 23.2 billion euros (about 40.8 trillion won), it was nearly cut in half.
The number of FDI projects in Germany peaked at 1,806 in 2021 and has been on a downward slope for four years. Last year's decline was the largest since related statistics began in 2016.
By country, China had the most investments with 228 projects. The United States trailed China with 206. The number of U.S. investments in Germany was the lowest since 2016.
Switzerland followed with 174, the United Kingdom with 117, the Netherlands with 89, and France with 88. Korea made 15 investments in areas such as logistics and energy.
Achim Hartig, GTAI's head of investment promotion, said, "Because of global uncertainties such as tariff and trade disputes, corporations are somewhat cautious in making investment decisions." The point is that the decline in investment is not unique to Germany.
However, some say Germany's investment appeal itself is waning. Henrik Ahlers of consulting firm EY's Germany office told the business daily Handelsblatt, "While France and the United Kingdom have shown an upswing, even if temporary, Germany has headed in only one direction for years—down."
Ahlers cited high tax rates and labor costs, energy expense, and bureaucracy as obstacles to attracting investment into Germany. He said, "There has been talk of reform for years, but there is hardly any real progress."
German Chancellor Friedrich Merz says he intends to push reforms such as cutting corporate taxes to restore industrial competitiveness. Merz said at an electronics and electrical industry conference on the 20th (local time), "The federal government's top priority is for Germany to remain a strong industrial base and stand at the forefront of innovation."