Rising oil price could hit German motoring

3rd August 2004, Comments 0 comments

4 August 2004 , HAMBURG - German automakers have voiced alarm at the soaring price of oil, suggesting it would limit leisure motoring, but other German exporters predicted world trade would withstand the shock. Bernd Gottschalk, president of the German automakers federation VDA, said, "This is very nasty." He said Germans were already reluctant to buy new cars, despite a raft of new models, and dearer fuel would only make that worse. At the VDMA federation, representing German engineering businesses, econo

4 August 2004

HAMBURG - German automakers have voiced alarm at the soaring price of oil, suggesting it would limit leisure motoring, but other German exporters predicted world trade would withstand the shock.

Bernd Gottschalk, president of the German automakers federation VDA, said, "This is very nasty." He said Germans were already reluctant to buy new cars, despite a raft of new models, and dearer fuel would only make that worse.

At the VDMA federation, representing German engineering businesses, economist Olaf Wortmann predicted a slip in export sales, while noting that oil exporting nations would have more money to spend. "On balance though, it is negative for us," he said.

At German airline Lufthansa, a spokeswoman said the spiking oil price would have little direct effect because of hedging contracts. She said the airline used futures contracts to ensure predictable prices for 90 per cent of the aviation fuel it buys.

Anton Boerner, president of the German Wholesale and Export Trade Federation, said the world economy could withstand higher oil prices.

"We don't believe there is any awful setback awaiting us this year or next because of oil prices," he said.

The world economy had in fact been remarkably robust recently. Even if oil prices receded somewhat, they were bound to remain at a high level because of limited output capacity, he noted.

At Ifo, the Munich-based economic research institute which compiles a monthly index of German business sentiment, chief economist Gernot Nerb said there was no immediate plan to alter economic-growth forecasts in the light of the price jump.

Ifo has predicted the German economy would grow 1.7 percent this year.

"We programmed in a lower oil price, centred around EUR 35 per barrel," said Nerb. "We would have to change it if the current price became the new average."

The price of crude oil hit a recrod high this week partly as a result of market concerns about supply resulting from the conflict in Iraq.

DPA

Subject: German news

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