Frankfurt am Main – September 09, 2026 -- Thirty percent of German small and mid-sized companies (Mittelstand) with foreign business expect their cross-border revenues to decline over the next three years, according to a new KfW Research study, with 6 percent forecasting a sharp drop. Roughly 24 percent anticipate growth, while 47 percent expect no change.
The findings stem from a January 2026 survey conducted before the outbreak of the Iran conflict, meaning sentiment may have since deteriorated further.
Exporters diversify markets as competitive pressure mounts
Nearly 16 percent of internationally active Mittelstand firms opened new export markets or gained new foreign customers over the past five years, and 7 percent plan to do so going forward. Roughly twice as many companies are planning a stronger focus on the EU single market. Manufacturing, which generates about 43 percent of total Mittelstand foreign revenue, is under the most adaptation pressure and is diversifying export markets most actively.
Relocation plans triple among industrial firms
Only 4 percent of internationally active companies relocated activities abroad over the past five years, but 12 percent now plan to do so within the next five years -- a figure that jumps to 29 percent among manufacturing firms specifically. Even assuming only half of these plans materialize, KfW estimates roughly 7 percent of industrial Mittelstand firms could shift part of their production abroad within five years.
KfW Chief Economist Dr. Dirk Schumacher called the trend concerning for German growth and prosperity, urging policymakers to cut bureaucracy, lower energy and labor costs, reduce taxes, and deploy trade and industrial policy tools to shield companies from international disadvantages.
Foreign revenue fell 2.9% in real terms in 2024
As of 2024, about 21 percent of Germany's roughly 3.9 million Mittelstand firms were active abroad, rising to 46 percent in manufacturing. Foreign revenue totaled €699 billion in 2024 -- flat nominally versus 2023 but down 2.9 percent adjusted for inflation. A January 2026 survey found that a third of internationally active firms saw revenue decline again in 2025 compared with the prior year, while only about one-fifth reported growth.