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German industry fears a long dry spell

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Großrohrwerk EEW im Seehafen von Rostock. Die deutsche Industrie 
leidet unter der schwachen Binnennachfrage. Quelle: dpa

Großrohrwerk EEW in the port of Rostock. The German industry is suffering from weak domestic demand. Source: Reuters

FRANKFURT. Crucial to the reserve were surprisingly weak data for the beginning of the year. Orders from abroad helped offset weak domestic business. "It’s hard, but not fast from the bottom of back up," said the chief economist of the Association of German Machinery and Plant Manufacturers (VDMA), Ralph Wiechers. A recovery in small steps "expects, the Chief Executive of the Association of Chemical Industry (VCI), Utz Tillmann:" We do not expect that there will be a significant revival in 2010. "

Laborious process of catching up

Both industries are considered clock the German economy. They lack jobs, will this affect the rest of the economy. That the economic recovery in Germany falters, had already indicated the Ifo business climate index. The indicator of the mood of the industrial sector in Germany, a monthly measure was dropped in February for the first time in ten months – and because companies evaluate their business situation was less favorable than the month before. The business outlook for the next half year estimated the approximately 7,000 companies surveyed, however a slightly more positive. The economic recovery, it concluded Ifo, is expected to continue after the hard winter.

Also, the ECB remains cautious

At the high uncertainty of the economic recovery on Thursday dismissed the president of the European Central Bank (ECB), Jean-Claude Trichet out. The economic recovery in the euro zone is supported by the inventory cycle, the development of exports and to stimulate action by governments. The recovery process will be uneven course. The ECB remains cautious in its growth forecasts.

Is the cause of the current reluctance of German industry, in particular the still weak domestic business. Sun declined to order the machine and plant construction in January compared to last year due to weak demand on the domestic market increased by three percent, said the industry association. Although domestic business fell by 17 percent, and foreign demand rose by six percent.

The weak growth in Germany says VDMA chief economist Wiechers, among other things, that the German people later than the foreign buyers were slipped into crisis. "The country therefore needs some time until it has recovered."

In the less affected by short-term fluctuations in three-month comparison from November to January totaled a minus for business with German clients to ten percent, orders from abroad rose by two percent. The bottom line was a decrease of three percent for the SME-based industry, puts the year and a half has now been in a deep crisis. In the crisis year of 2009, production was still down by nearly 25 percent to 151 billion euros.

Wiechers expects that for the current year with a stable output capacity, is primarily due to the customers in Asia. China replaced the U.S. as a 2009 from the main market for the machines.

The chemical industry – for vehicle manufacturers, electrical and mechanical industry, the fourth largest German industrial sector – expected this year mainly because of foreign business, with an increase in output by about five percent.

Most groups achieved high growth rates currently mainly in the emerging markets of Asia and South America, said the VCI. Be blinded by the figures one should not: "The growth in Asia and Latin America can not compensate for what is not sold in Europe," said Tillmann. About 80 percent of the chemicals produced in Germany were sold in Europe. And this would continue the dry spell 2010th "The industry will continue to operate in crisis mode," said Tillmann. The plants are still not sufficiently utilized, with 78 percent recently. Pre-crisis levels were achieved by 85 percent.

Wchstumsschwäche

Weak year-end: The economy of the euro zone has stagnated the end of last year almost. The gross domestic product grew in the fourth quarter of 2009 compared to the previous three months by only 0.1 percent, Eurostat said today in a second estimate, confirming preliminary data. After several quarters of negative signs the economy of the euro area had to jump out of the recession until the third quarter with a growth of 0.3 percent achieved.

Lack of investments: Business was impacted, the lack of investment, which fell by 0.8 percent. Private consumption did not contribute to growth – it has stagnated. However, supported the development of foreign trade.