German industry eyes shift toward defense sector amid Middle East conflict

A survey obtained by the business news magazine Wirtschaftswoche revealed on Friday that almost a third of industrial companies see opportunities for their own business models in the security and defence sector.

"The survey reflects the positive outlook in the defence industry – as a result of geopolitical conflicts", said DIHK expert Rainer Kambeck.

The general economic situation remains tense due to the conflict in the Middle East, with leading institutes having revised down their forecast for German growth this year.

But the defence sector is likely to benefit from geopolitical tensions, with the German government having committed to spend heavily on defence in the coming years.

The DIHK’s special analysis suggests one in six industrial firms in Germany is already integrated into the defence sector's value chain.

The frontrunner is the vehicle manufacturing sector, where 36% of companies are active directly or indirectly in the defence sector.

Only 2.5% of all industrial firms explicitly produced military goods, while 6.9% make manufactured goods that could be used for both civilian and military purposes. A further 7.6% saw themselves as suppliers.

Looking to the future, a further 12.3% of industrial firms planned to become involved in the defence sector, in addition to the current 17%.