Central and Eastern Europe (CEE) is strengthening its position in the strategies of German companies, with 63% of them expecting the region’s importance to increase over the next five years, according to the annual study by KPMG in Germany and the German Eastern Business Association titled “German-Central and Eastern European Business Outlook 2026.” Poland remains the biggest beneficiary of this trend, with 56% of German companies planning investments in CEE identifying Poland as their preferred destination—an increase of 11 percentage points year-on-year and by far the highest result in the region. At the same time, 16% of surveyed companies point to mounting pressure from Chinese firms, which are steadily increasing both their investment activity and exports in the region.
Poland Attracts Investors
Poland remains the most attractive investment destination in Central and Eastern Europe for German companies. In 2026, as many as 56% of German firms planning investments in the region indicated Poland as their target location. Ukraine ranked second, with 43% of responses—including 19% of companies declaring readiness to invest even if the war continues, while another 19% are already present in that market. Third place was shared by Romania and the Czech Republic, each indicated by 35% of respondents.
Compared with the previous year, Poland recorded the largest increase in investor interest, followed by the Czech Republic and Ukraine, while Serbia, Hungary and Romania saw declines.
Central and Eastern Europe Becoming More Important to German Companies
Central and Eastern Europe is increasingly securing a lasting place in the strategies of German companies. This is confirmed by the investment plans of firms already operating in the region: 55% intend to invest in CEE over the next five years, and 32% are planning projects worth more than EUR 5 million. The most frequently mentioned areas for investment are services (31%) and the expansion of production capacity (29%), while around 22% of companies plan to strengthen their export and distribution structures.
In response to growing challenges, more and more firms are considering relocating part of their production. Twenty-six percent of companies are evaluating a shift of some production from Germany to CEE, driven by rising labour costs, workforce shortages and structural challenges in the German market.
Economic Transformation and the Rising Role of Innovation
The transformation of Central and Eastern Europe is accelerating thanks to a population of around 155 million people, rising purchasing power, and projected economic growth of nearly 2.9% in 2026, supported by further integration with the EU single market and the euro area. Poland stands out particularly strongly within the region, remaining its economic pillar, although—despite the ongoing war—German companies also see significant potential in the Ukrainian market.
At the same time, the region’s growing attractiveness means stronger competition: 16% of surveyed companies report increasing pressure from Chinese businesses that are expanding their investment and export activities across CEE.
Trade between Germany and CEE continues to break records. In 2025, total trade reached EUR 529.3 billion—more than the combined value of Germany’s trade with the United States (EUR 240.5 billion) and China (EUR 251.8 billion).
The region is also increasingly emerging as a hub for innovation and R&D. Among investment priorities, artificial intelligence and automation rank highest at 38%, ahead of digital infrastructure (23%) and the defence sector (20%). At the same time, the most promising markets in CEE are seen as renewable energy (45%), electromobility and battery technologies (40%), and raw materials processing (36%)—all sectors with high research and development intensity.
The survey results point to a clear shift in how the region is perceived: from a low-cost base to an integrated growth market. For Poland, as well as for the other CEE countries, this creates an opportunity to attract more advanced investment projects, especially in the context of the nearshoring trend and the growing importance of secure supply chains.
“It is worth emphasising that more and more German companies view CEE not only as a production location, but also as a place for research and development and for implementing innovation. Tax incentives available in the region, such as special economic zones, R&D tax relief or the IP Box regime, as well as EU and national grant programmes, can further support investments and new projects. At the same time, data regarding political risks, corruption and bureaucracy remind us that maintaining competitiveness requires consistent improvement in the quality of the regulatory environment and institutional stability,” said Kiejstut Żagun, Partner in the Tax Advisory Department and Head of the Innovation, Reliefs and Grants Team at KPMG in Poland.
Stable Employment Outlook
German companies generally assess their current situation in Central and Eastern Europe positively. Forty-seven percent describe it as good or very good, 39% as stable, and only 14% as poor. Over the next five years, 75% of businesses expect business conditions in the region to improve, while only 5% anticipate a deterioration.
This translates into moderately optimistic employment plans. Over the next year, 56% of companies expect to maintain current employment levels, around 23% plan to increase headcount, and only one in ten surveyed organisations intends to reduce the number of employees. Over the longer, five-year horizon, 61% of respondents say they will create additional jobs, while only 3% are considering workforce reductions.
Shared service centres dominate as the preferred operating model in Central and Eastern Europe. Among all location categories, SSC/BPO operations achieved the highest result as a priority model in the region, with 74% of responses.
Particularly noteworthy is the fact that companies are not only planning investments, but also expecting employment growth over the longer term. This indicates that investment decisions are strategic in nature and linked to building a lasting operational presence.
“In the Polish context, this is especially visible in the dynamic growth of the services sector. Poland remains one of the most attractive locations in Europe for Shared Services / Business Process Outsourcing centres, and the growing interest of German companies in higher value-added functions—such as finance, HR, IT, and even advanced business processes including supply chain management, working capital and direct sales support—further strengthens this position. The survey results confirm that the region, and Poland in particular, remains one of the main beneficiaries of the reorganisation of European value chains, including in the services dimension,” said Radosław Jankie, Partner, Advisory, and Head of the Shared Services and Outsourcing Team at KPMG in Poland.
About the Report
“German-Central and Eastern European Business Outlook 2026” is an annual opinion survey prepared jointly by KPMG in Germany and the German Eastern Business Association (Ost-Ausschuss der Deutschen Wirtschaft). The report is based on surveys conducted between November 2025 and January 2026 among 115 companies—German enterprises and local subsidiaries of German groups operating in the Central and Eastern European region.
The study covers 20 CEE countries and focuses on the assessment of the current business environment, investment plans, and the opportunities and challenges facing German business in the region. The survey findings are complemented by a broad macroeconomic overview of the region, based on data from the IMF, Eurostat, the Bundesbank and Transparency International.
