Published On: Fri, Dec 5th, 2014

German Businesses Suffering Effects of Russian Sanctions

Russian President Vladimir Putin (R) and German Chancellor Angela Merkel

Some German high-value exporters are suffering from the current Western sanctions imposed on Russia, contributing heavily to the fading of German economic growth, according to an AP report.

Russia has slipped from No. 11 to No. 13 buyer of German exports. As a result, German businesses have been struggling to avoid layoffs, in the hopes that things will get better, but as Chancellor Angela Merkel seems to thin the sanctions are here to stay, the pressure on many companies to read the bottom line is increasing.

Merkel has made clear, after last month’s talks with Russian President Vladimir Putin: “We will impose economic sanctions against Russia as far and as long as they are necessary.”

The AP report cites the case of the Vakoma company’s modern factory in eastern Germany, maker of custom-made industrial drives, vacuum pumps and compressors. Vakoma invested $18.7 million in the new plant, and exports some 90 percent of its products—60 percent of that going to Russia.

“A lot of our projects that we have developed over years are now on hold and simply aren’t being decided on, ” managing director Gerhard Krossing told AP.

German industrial leaders have supported Merkel so far, but their support could wane should the Russian market be lost permanently, at a time when German exporters are facing a downturn in demand for their goods in every key market, including Europe and China, AP reported.

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