(RTTNews) - The outlook for German industry for next year is “guardedly positive” amid improved sentiment and a strong pick up in production in some important upstream sectors, Deutsche Bank Research said in a report.

Though improvement is forecast for some upstream sectors such as the chemical industry, the group expects setbacks at the turn of the year because the scrapping of incentives for old cars for instance was introduced only for a limited period of time. Deutsche Bank Research sees manufacturing output growth of about 5% for full year 2010 from the very low level reached in mid-2009.

“This forecast growth rate does not mean good times, however”, the report said. The group expects the level of capacity utilisation in the industry to be lower by at least 8 percentage points below the long-term average at the end of 2010. “This would be a more pronounced deviation than during the recession in 2002/2003.” Many companies are set to face very high adjustment pressure next year as a number of support measures will have expired. The group expects 2009 manufacturing output to be nearly 20% lower on a price-adjusted basis than last year.

Export industry is forecast to show some improvement next year, moving ahead with a slight canter than a gallop. Car exports are forecast to shrink 25% this year in units. The group expects automobile production to improve with 5% growth in 2010, much of which will be attributable to a statistical overhang.

Meanwhile, consumer industry is likely to remain hurt by rising unemployment in 2010 despite economic recovery, the report said. Capital goods industry is expected to benefit from recovery. Construction sector is expected to witness a slight increase in output next year boosted by government stimulus.

On November 3, Germany’s chemical industry association VCI said the pace of recovery in the industry is gaining speed boosted by demand from Asia and Latin America. Deutsche Bank Research sees a 14% decline in the chemical industry production this year, worse than VCI’s forecast for a 10% fall. The industry body also predicted a 12% fall in this year’s revenue. Going forward, the research group expects production to improve next year.

Deutsche Bank expects a moderate growth of just over 1% for the German economy in 2010. “The upswing will therefore be an arduous climb,” the report said.

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Posted in Categories: Economy, Releases.

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