The depreciation of the rouble and a lack of investment activity have been impacting German mechanical engineering companies’ business in Russia since mid-2013. In the first three quarters of 2014, mechanical engineering exports to Russia fell by 16% to EUR 4.9 billion. The current fall in the rouble significantly exacerbates the situation for mechanical engineering firms operating in Russia and means that investments are unlikely to pick up in the near future.

“Russia is a very important market for German mechanical and plant engineering, and the risks arising from the current situation for the coming year are growing by the hour at present,” explains Ulrich Ackermann, Head of VDMA Foreign Trade in Frankfurt. “However, the German mechanical engineering industry is very well diversified internationally. For the sector as a whole, as opposed to individual companies, there is no dependency on the Russian market.”

Russia is currently the fifth most important market for German mechanical and plant engineering, accounting for 4.4% of total German machinery exports in the first nine months. In 2013 Russia was the fourth most important market for German machinery exporters and accounted for 5.2% of the total volume.

Since this Monday, the already ailing rouble has been in free fall. Over the course of Tuesday, the exchange rate reached 100 roubles to the euro at times. The increase in the key interest rate from 10.5% to 17% failed to produce any effect. There had already been criticisms beforehand that this step put an unnecessary burden on the economy for the benefit of the financial system. The Russian government has ruled out legal restrictions on the movement of capital for now, said the Russian Minister for Economic Development Ulyukaev after a cabinet meeting – an announcement that was favourably received by the business community.