-Expects Domestic Demand To Remain Robust In Europe
-U.S. Slowdown, Dlr Decline Of 10-15% Vs Euro Will Not Impact German Exports

BERLIN (MtkNews) - The German machinery manufacturing association (VDMA) Tuesday left unchanged its forecast for production this year at +5%, noting that economic growth prospects in Europe remain robust due to the healthy outlook for exports.
"We already forecast last autumn that growth would increase by 5% this year. We are sticking with our forecast," VDMA President Eberhard Reuther said at the organization's annual press conference.
"Western Europe, our domestic market, will develop favorably in 2001, since domestic forces will remain robust," Reuther said.
The slowdown in U.S. economic growth this year will not effect machinery exports from Germany, as the dollar will weaken only slightly against the euro in the period ahead, Reuther said.
"We don't believe that the foreign exchange rate of the U.S. dollar against the euro will change noticeably. We just expect a change of 10-15%," Reuther said.
In addition, the VDMA said, the U.S. slowdown would be only temporary and thus have only a limited effect on German capital goods exports.
With regard to the Japanese yen, the VDMA said that it expects the Asian currency to weaken further in the period ahead and that this would sharpen competition for the German machinery sector.
The 2000 real production increase of 7.3% y/y in the machinery sector, was the best since German reunification, Reuther said, and forecast that 2001 export levels will be unchanged from last year year's strong increase in manufacturing orders for capital goods.
In addition, German firms benefitted from the euro's weakness and also from moderate wage rounds from 2000.