July 31, 2014 - 16:18 AMT
PanARMENIAN.Net - A group representing Germany's machinery industry revised its output forecast sharply lower on Thursday, July 31, pointing to the effects of political tension with Russia and the wider uncertainty it has caused, the Associated Press reports.
The VDMA group said it now expects production of machinery to grow by about 1 percent this year, rather than the 3 percent it predicted in October.
"The conflict with Russia is not just leaving tracks in bilateral trade — it is generally hindering demand in important sales markets for our industry," VDMA chief economist Ralph Wiechers said in a statement.
"Economic sentiment has darkened in many countries; as a result, orders cannot develop the momentum that would be needed" for 3 percent growth this year, he added, though the industry can still hope to achieve a production record of 199 billion euros ($267 billion).
"We know that we could suffer economically ourselves — we know that our trade with Russia is not overly large, but it does have some significance," Vice Chancellor Sigmar Gabriel, who is also Germany's economy minister, said on Wednesday. Germany has Europe's biggest economy.
Russia was only Germany's 11th-biggest trading partner last year, well behind the top four of France, the Netherlands, China and the U.S. German exports totaled 36.1 billion euros, 3.3 percent of the country's total exports, with machinery and vehicles among the main goods sold.
As for the potential damage, Gernot Erler, the government's coordinator for cooperation with Russia, told n-tv television that some estimates see sales to Russia dropping by 4 billion to 6 billion euros.
The German economy is generally in robust shape. Official figures Thursday showed the country's unadjusted jobless rate edging up to 6.6 percent in July from 6.5 percent the previous month for purely seasonal reasons, while the underlying trend remained positive.