German engineering sector sees slower growth next year

BERLIN: German engineering companies are forecasting a slowdown in sector-wide growth next year, the industry association VDMA said on Tuesday.

"We're expecting output growth of 4.0 percent in 2012," VDMA chief Thomas Lindner told a news conference in Berlin.

For this year VDMA is pencilling in growth of 14 percent.

The engineering industry, which employs nearly one million people in Germany and commands a worldwide market share of 17 percent, is one of the main pillars of the German economy.

It was badly hit by the global economic crisis in 2009, but bounced back with strong growth last year on the back of strong demand for German-made goods in Asia.

But, as in other key sectors, sector-wide growth is losing momentum.

"German mechanical engineering companies are concerned that the eurozone debt and financial crisis is going to have a negative effect on business," Lindner said.

Small and mid-sized companies, which form the backbone of the sector, are increasingly worried that banks will not be able to finance them.

Clouds are building up over the German economy as a whole, with gross domestic product (GDP) set to slow to just 0.8 percent next year from close to 3.0 percent, according to the country's leading economic think-tanks.