VDMA at the Hannover Messe
Growth depends on energy and China - total failure Russia?
As one of Germany's most important export sectors, the mechanical engineering industry is pinning its hopes this year on energy security and an easing of trade problems in China.
At the start of the Hannover Messe on Monday, the President of the VDMA association, Karl Haeusgen, spoke of the negative impact of the war in Ukraine, supply chains and replenishment, which were putting pressure on the economy. "But at the same time, we can look back on a very high order backlog," he added. "This is why we continue to expect real production growth in 2022, but have to reduce our forecast from plus 4% to plus 1%."
Higher nominal sales growth expected
In principle, the core industry could recover from the coronavirus crisis, albeit at a slower pace. However, this would depend on there being no abrupt interruption to the energy supply. Haeusgen also emphasized: "In many places, high investments are needed to realign the value and supply chains." In China, new pandemic lockdowns also hit German imports and exports hard.
In an optimistic scenario, the key industry expects a nominal - i.e. not price-adjusted - increase in turnover of up to 8% in 2022, corresponding to possible total revenue of 239 billion euros. However, inflation in connection with scarcer raw materials and primary products is one of the biggest uncertainties. And industrial producer prices have fallen behind end consumer prices in many countries.
Russia becomes a total failure
A survey suggests that business in Russia, which is important for machinery and plant manufacturers, could almost be a total loss due to the sanctions imposed since the start of the war at the end of February. According to the survey, 95% of the 300 or so VDMA members who took part stated that their activities in Russia had been noticeably restricted or had come to a complete standstill.
Three out of four companies expect their activities in Russia to deteriorate further or even come to an end. Regarding the debate on independence from Moscow and the implementation of EU climate protection packages, Haeusgen said that it was now "imperative to place a much greater focus on increasing energy efficiency".
In the first quarter, exports, including price increases, rose by 0.4% year-on-year to 43.6 billion euros. In the individual month of March, they had already fallen by 6.2%. Business in the USA in particular has been going well recently.
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