German industry concerns about sanctions against Russia

Sanctions against Russia had already negatively affected German exporters and would not be an effective means to solve political crisis, warned Association of German Chambers of Commerce and Industry (DIHK) on Monday.

"Approximately one in four German companies that are active abroad were affected," said DIHK foreign trade chief Volker Treier in an interview with German newspaper Rheinische Post.

Those doing business with both the United States and Russia were particularly affected, because they had to check almost all their contracts due to different sanctions imposed by the United States and the European Union, he said.

Both the US and the EU decided to expand their sanctions against Russia last Wednesday in response to Russia's position toward the situation in Ukraine. Sanction targets include Russian individuals, enterprises and banks.

"Sanctions are not effective means to resolve the political conflict," said Treier in another interview with German Handelsblatt newspaper on Monday, warning that "a dangerous spiral of sanctions and retaliation in economic terms" would be triggered.

• He said if stronger sanctions against Russia were imposed due to the MH17 plane crash, foreign trade would further be weakened, investors would be unsettled and global economy would slow down.

Regarding effects on German economy, Treier said the Ukraine crisis had led DIHK to downwardly adjust its forecast for German exports growth by 0.5 percentage points to 4 percent in 2014. "If the crisis escalated, our forecast could be lowered again," he said.

Also on Monday, German central bank Bundesbank estimated that the Europe's largest economy stagnated in the second quarter, following a growth of 0.8 percent during the first three months this year.

"The industry turned down a gear," it said. "In addition to calendar effects, the increased geopolitical tensions are likely to have played a role."

Earlier data showed that unrest in Ukraine had sapped confidence of German companies and investors.

Mannheim-based Center for European Economic Research (ZEW) found in its recent survey that German investors' confidence in economic outlook in July dropped to the lowest level since December 2012.
Sources: Xinhua - globaltimes.cn
21/7/15
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