BERLIN (Reuters) – Germany’s VDMA engineering association cut its 2022 machinery production growth forecast again on Monday as the conflict in Ukraine, global supply chain difficulties and lockdowns in parts of China outweighed the industry’s strong order backlog.
The VDMA said it now expects production of industrial machinery carrying the “Made in Germany” label to grow by 1% in 2022 after it slashed the forecast to 4% from 7% two months earlier. Last year, production grew by 6.4%.
“Russia is traditionally an export market for engineering firms as its investments in local production are relatively low. However, losing this market can be very painful for individual companies,” VDMA President Karl Haeusgen said in a statement.
He added that before Russia’s invasion of Ukraine, 80% companies described their business prospects in Russia as good or satisfactory. Now, 75% expect it to deteriorate in the next six months or want to abandon it altogether.
“This shows the extent to which the war has changed everything,” Haeusgen said.
He added that even if the war ends quickly and Ukraine restores its territorial sovereignty, it will take many years before companies can base their business with Russia on a genuine relationship of trust.
Machinery had been a substantial part of the 26.6 billion euros ($28.53 billion) in goods Germany exported to Russia last year.
($1 = 0.9322 euros)
(Reporting by Matthias Inverardi; Writing by Zuzanna Szymanska; Editing by Raissa Kasolowsky)
