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Business

German firms expect deeper slump in Russia business

Sanctions against Russia will lead to a further decline in German trade with the country, a German foreign trade lobby group has said, expecting a turnaround in bilateral business to happen not before 2017.

The Association of German Chambers of Industry and Commerce (DIHK) said Friday it expected exports to Russia to shrink to "less than 22 billion euros" ($23.8 billion) this year, down from 39 billion euros in 2013 - the year before the EU imposed sanctions against Russia over the Ukraine conflict.

For 2016, the trade lobby group forecast another slump in exports by 5 percent, before expecting an "improvement" in 2017.

According to DIHK data, the export decline means Russia has slipped down a list of Germany's most important trade partners to 15th place in the first 10 months of this year, compared with 13th place in 2014.

The DIHK said there was growing concern among companies with business ties to Russia, pointing to a survey in which two thirds of firms said their operations had been affected by the sanctions, compared with just over a third in August.

'Considerable pain'

A survey conducted by the German-Russian Foreign Trade Chamber (AHK) in December showed that half the responding companies complained about financial restrictions linked to the sanctions, while a quarter said they were feeling the impact of sanctions on goods that could be put to either civilian or military use.

Presenting the survey on Friday, AHK President Rainer Seele told a news conference that German businesses were "suffering considerably" in Russia.

However, Germany is determined to maintain sanctions against Moscow despite some of its key industries being adversely affected. On Wednesday, Chancellor Angela Merkel told parliament that the sanctions could only be eased once February's peace agreement by Germany, France, Ukraine and Russia was fully implemented. That had not yet happened, she said.

Watch video 01:28

Russian sanctions hurt Turkish businesses

Sanctions side effects

In addition to the EU's Russia sanctions, German businesses were also being hit by the current rift between Moscow and Ankara, Seele said.

Economic measures imposed by Moscow

over the downing of a Russian war plane by Turkey

in Syria, were "negatively affecting" German companies based in Russia, Seele noted, "among them German carmakers which import spare parts from Turkey."

Seele also mentioned major delays in shipments from Turkey to Russia, as well as staff problems because companies could no longer employee Turkish citizens at their operations in Russia.

uhe/hg (Reuters, dpa)

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