The order situation in the mechanical engineering sector continues to improve thanks to the global economic recovery in the industry. According to a VDMA member survey, the BRIC countries in particular are creating a positive mood: the current business situation and, in particular, the business outlook for the next six months are predominantly positive. In China in particular, there is no longer any sign of the coronavirus slump: 61% of the subsidiaries surveyed rate their local business situation as good, a further 35% as satisfactory and only 4% as poor.

"The start of the year was exceptionally good for the mechanical engineering industry in China. In spring 2021, capacity utilization reached an all-time high since the VDMA Business Climate Survey began in 2016," said VDMA Chief Economist Dr. Wiechers. As in the fall 2020 survey, suppliers of parts and components, namely fluid technology, drive technology and automation technology, are particularly positive. However, the strongest growth in the assessment of the business situation this time was recorded by the specialist sectors of machine tools and textile machinery.

Despite the positive mood, however, there are also restrictions to report: Travel restrictions, as well as supply-side bottlenecks such as shortages of raw materials and primary products, are also posing challenges for VDMA members in the BRIC countries.

The BRIC countries at a glance

The overall positive sentiment from the fall survey of VDMA members in Russia was confirmed in spring 2021. VDMA subsidiaries were able to increase their turnover last year compared to 2019 despite the pandemic. Growth of just over 10% is now forecast for 2021. By far the biggest obstacle to business development this spring are the Covid-19 restrictions, including travel restrictions. For the first time, respondents in Russia were also asked about the demand for CO2-neutral goods. Only 7% stated that they had already been approached by a Russian customer about this topic as a future option.

India slowed down by rising corona figures

There have been several easing of restrictions in India over the past few months, which has led to a significant improvement in business activity. After all, 49% of companies stated that the current order situation is above the usual normal level. However, the renewed sharp rise in coronavirus cases is slowing down the recovery in the industry, at least in the short term, according to company information - which coincides with the time of the survey: almost half (49%) of the VDMA subsidiaries surveyed expect incoming orders to stagnate over the next three months, while 19% even anticipate a decline in incoming orders. 32% expect incoming orders to increase. However, optimism prevails for the year as a whole: "Despite another setback, the mechanical engineering companies surveyed continue to expect double-digit sales growth for the current year," said Wiechers.

Travel restrictions are the biggest challenge in Brazil

A noticeable economic recovery can also be observed in Brazil, the most important sales market and production location for the mechanical engineering industry in Latin America: 95% of the companies surveyed rated their business situation as either good (35%) or satisfactory (60%). By comparison: in the fall survey, only 75% of companies rated their business situation as good (26%) or satisfactory (49%). When asked which factors are currently hampering business activity, restrictions as a result of the coronavirus pandemic were mentioned in particular. However, shortages of raw and input materials are also an issue. Nevertheless, companies in Brazil are generally optimistic about the current year. After only a slight increase in turnover last year, most survey participants are expecting double-digit growth in 2021.

The VDMA surveys its members every six months on current business developments in the BRIC countries. The first survey was conducted in spring 2016, and the most recent survey with a total of around 570 participants was conducted between April 12 and April 30, 2021.