Prospects for the development of machine building in the EU

Manufacturing in the EU machinery sector fell 0.4 percent YoY. The decrease in activity is a reflection of the general situation of sluggish demand for machinery and equipment, both in the EU and international markets.

However, the difference in the productivity of the EU countries during the year was significant. Strong production growth was recorded in the UK due to strong domestic and US demand. Activities have also expanded in the Netherlands, Austria and most of the Central European countries.

Meanwhile, production in Germany, Italy, Spain and Sweden declined markedly in late summer, erasing the effect of growth in the first quarter. Consumption in Germany is a good indicator for the business situation in the EU, defining a modest year-on-year growth on the back of an increase in domestic and export orders. Production results for the third quarter of 2014 indicate stabilization at the summer level.

Doing business will remain subdued in the fourth quarter, which means that total production in 2014 will grow by just 1.2 percent. This is weaker than expected for mechanical engineering, which can be attributed to sluggish demand for investment in the EU, an unstable situation due to events in Ukraine and a decrease in export demand in large developing countries.

The forecast for 2015 represents a moderate acceleration in production growth. Business sentiment should gradually improve, provided there is no further escalation of the conflict in Ukraine. The outlook for capital goods investment is positive. A weaker euro will strengthen the competitive position of eurozone exporters in the US and emerging markets around the world.