Russian Winter

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German Exporters to Russia Feel the Pain, But See Little Gain

CEO_russia unhappy kaeser next to putin
Company heads such as Joe Kaeser of Siemens must prepare themselves for the financial impact of sanctions.
  • Why it matters

    Why it matters

    Losses in exports caused by sanctions against Russia and diminished trade with embattled Ukraine will slice at least €10 billion from German companies, with heavier losses expected if the political situation doesn’t improve.

  • Facts

    Facts

    • Sixty-two percent of companies say they will have to take radical action to cope with sanctions in Russia.
    • Twenty percent plan to lay off employees.
    • China is taking advantage of the sanctions to do more business with Russia.
  • Audio

    Audio

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The Ukraine crisis will have harsh consequences for German business, the country’s leading business group said.

The Association of German Chambers of Industry and Commerce estimates a drop of up to 20 percent in exports to Russia by the year’s end. This would amount to €7 billion ($9.05 billion) in losses. The decline in exports to Ukraine will cost Germany another €3 billion. Companies are bracing for the worst.

“We see very clear economic effects from the Russian crisis and the German economy is preparing itself for another downturn,” said Rainer Seele, president of the Hamburg-based German-Russian Chamber of Foreign Trade.

A survey of German firms doing business in Russia conducted by Mr. Seele and Volker Treier, deputy chief executive officer and foreign trade expert at the chamber, known as DIHK, in Berlin, reaches some dramatic conclusions.

Among companies polled, 71 percent describe economic sanctions against Russia as recessive and bad. As a result, 62 percent are planning radical measures such as canceling projects in Russia (26 percent), laying off employees (20 percent), introducing shorter working hours (8 percent) or abandoning Russia altogether (8 percent).

According to Mr. Treier, if the economic situation doesn’t improve within six months, the trend toward layoffs will “gain momentum.”

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