German engineering industry expects rise in exports to U.S.
Reuters
Published Mar 29, 2017 08:57AM ET
German engineering industry expects rise in exports to U.S.
By Georgina Prodhan and Tom Käckenhoff
DUESSELDORF, Germany (Reuters) - Germany's engineering association expects exports to its top foreign market, the United States, to rise this year after a slide in 2016 as business sentiment is underpinned by a rising oil price and the absence of last year's election uncertainty.
The head of the VDMA, which has often warned about President Donald Trump's protectionist trade stance, said those factors remained despite evaporating optimism regarding Trump's ability to propel economic growth by fiscal stimulus and tax cuts.
"I don't expect exports to the United States to fall. On the contrary, I think they should increase," Carl Martin Welcker told Reuters in an interview on Wednesday, but added: "Business is always sentiment. It can fall just as fast."
The VDMA is Germany's largest industrial association, with over a million workers and 2016 sales of 220 billion euros ($237 billion). Its members include large companies such as Siemens (DE:SIEGn) as well as thousands of medium-sized firms.
Welcker said Europeans should now focus on persuading Trump's administration to see the benefits of transatlantic trade. "I wouldn't advise the Europeans to get their heavy weapons out of the cellar. We have to convince them," he said.
Welcker stuck to his forecast for just 1 percent output growth by the VDMA's members this year, after higher demand for German machinery from other euro zone countries drove a 9-percent increase in engineering orders in January.
"A month is not much to go on," said Welcker, ahead of the publication of February orders on Thursday. He cited Britain leaving the European Union, French and German elections, Trump, and a Turkish referendum as factors making 2017 hard to predict.
Welcker said the VDMA's exports to "important countries like China" had started the year better than expected, but sales in its biggest market, Germany, were stagnant, highlighting the risks to domestic production of rising labor and energy costs.
Exports to Russia had likely hit rock bottom, Turkey was unlikely to show any growth for the next few months and Iran was turning out to be a disappointment, he said.
Brexit, which was formally triggered on Wednesday, was the topic of much discussion in the industry but had not yet had any real effect in terms of causing German engineering firms to change their investment plans, he said.
He said he hoped for minimal disruption to trade with Britain but understood the European Union's need to make sure the UK did not gain an advantage by leaving, with the risk of encouraging others to follow suit.
Get The News You Want
"I do think we have a certain influence... but politics has primacy," he said. "There are boundaries, which we respect."
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.