SANCTION WOES

Germans Losing Confidence in Russia

VW in Russia bloomberg
Volkswagen is still producing in Russia - but sanctions are hitting German companies hard.
  • Why it matters

    Why it matters

    German firms operating in Russia have been hit by the decline in the ruble, falling prices for raw materials as well as sanctions.

  • Facts

    Facts

    • The German Chambers of Commerce and Industry in Russia surveyed 158 firms employing 67,000 people in Russia.
    • Overall, they predict subdued economic development in Russia until 2017 as economic sanctions continue to bite.
    • Despite the challenges, only a fraction of the 6,000 German companies active in Russia want to exit, according to the survey.
  • Audio

    Audio

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German companies want to keep doing business in Russia, even though they think its economy has fallen to its worst level since the fall of the Iron Curtain, a survey shows.

Not one of 158 companies called the Russian economic situation good, and 80 percent said prospects were definitely bad, according to a survey by the Russian chapter of the German Chambers of Commerce and Industry. More than half expect their business to decline.

Overall, the companies, which employ some 67,000 people in Russia, predict subdued economic development until 2017. However, as many as 20 percent expect growth between now and then.

Not all the companies have blamed the economic sanctions, which the West imposed last year because of Russia’s annexation of Crimea and support of separatists in eastern Ukraine. Russia has since retaliated with its own sanctions.

Chamber of Commerce president Rainer Seele noted many reported the economic situation weakened before the sanctions even came into effect: “Economic development has been bad since 2013,” he said.

He blamed falling world market prices for raw materials, as well as insufficient structural reforms. “The sanctions are not the cause, but they have an exacerbating effect,” said Mr. Seele.

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