German Exports to Russia to Crash A Further 20% in 2015, Especially Cars

  • German car manufacturers already cutting back
  • This is another nail in Merkel's coffin
  • She just got finished doubling down on the hard line for Russia.  She owns it now.  No  backpeddling
  • We think 20% is way too conservative - it's probably going to be a lot worse...
Fri, Dec 19, 2014
|
2,864Comments
MORE: Politics
Much loved by Russians rich and not so rich - Germany will sell far less of them in the coming years

This article originally appeared at German Economic News.  Choppy translation courtesy of Googletranslate.


The German Industry and Commerce (DIHK) expects this year with a decline in German exports to Russia by 20 percent. 

German companies suffered from the "dramatic drop in purchasing power" of Russians said GCIC foreign trade director Volker Treier the "New Osnabrück newspaper" on Wednesday. 

To this end, the business outlook clouded in Russia next year on. Investment fell.

advertisement
"German car factories are connected or dismissed for several weeks on short-time working employees," said Treier. The sanctions against Russia acted as a catalyst of this development, which had however already been signed. Still up in consumer and durable goods sales, because Russian citizens were to spend their money even before it continues to lose value. "This development will be limited, however, used up savings," he warned.

In addition, the German company revenues would drop in Russia, because in euros only half that were converted worth what they brought in a year ago. With regard to the economic stability of Russia DIHK warned that the country is increasingly consume its reserves. Foreign exchange would not flow back into the country to the extent as in the past. Also to finance the budget was necessary because of the oil price Rutsches recourse to the reserves.

Economists use the Russian crisis to now present their latest forecasts untenable. This is surprising, however, because a Russian crisis was predictable in February at the latest since the events on the Maidan in Kiev. However, none of the institutions has been said that the sanctions could perhaps also have negative effects on Germany. This is not surprising: researchers such as Marcel Fratzscher Write a columnist in the Bild newspaper that is a staunch supporter of Merkel policy  in the Russian question.

Now Fratzschers DIW has recognized as Reuters reports:

A severe recession in Russia would DIW Institute considers also slow the rise in Germany. If the Russian economy would shrink by around five percent next year, then the economy would grow in this country less than previously expected, said the economists of the German Institute for Economic Research (DIW) on Wednesday. The gross domestic product would increase by 0.1 or 0.3 percentage point rise more slowly, said DIW expert Ferdinand Fichtner. "But that would not massive collapse of the German economy result." Currently, the researchers in Berlin in 2015 expect growth of 1.4 percent, and 1.5 percent this year. 2016 they expect an increase of 1.7 percent.

"But the risks are enormous," admitted DIW President Marcel Fratzscher. Reason is in addition to the economic turmoil in Russia, the fact that the euro-area economic'm not right on the spot. For momentum, however, worry the domestic economy in Germany, mainly because the consumers with their consumer spending boosted the economy. Citizens benefit According to the DIW of rising wages and a - also because of the falling oil price - low inflation. "We have the highest real wage growth since reunification," Fichtner said.

Because of the low oil prices and import prices are likely to fall. As a result, the DIW an increase in the current account surplus of 7.5 percent expected in relation to the economic strength. This value will be in the next and next year even at 8.0 percent. "This is an incredibly strong rise", Fratzscher said. "Since Germany is safe again have to take criticism." The European Commission classifies values ​​of lasting more than six per cent as a threat to financial stability. They shall also be the cause of imbalances in the world economy.

 

Click here for our commenting guidelines