The machine tool industry is more cyclical that most other capital goods industries. As a manufacturer of machines for the capital goods industry the sector experiences a double-accelerator effect. Because of this fact, the industry’s federation has contracted the Ifo Institute to produce an annual medium-term forecast (since 1989). This research project is part of the sectoral economic forecasts carried out by the department of Structural and Industrial Analyses which - in a bottom-up approach – contributes to the Ifo Institute's macro-economic forecasting activities.
The forecasting model has two parts: The short-term forecast is based on a regression analysis that uses the results of the Ifo Business Survey to identify the expectations of the most important clients (auto industry, mechanical engineering, electrical engineering) and to forecast demand for machine tools. The medium-term forecast uses – as exogenous information – a scenario of international economic development from which the main variables for an open, econometrically based forecasting model are derived.
Ifo Business Survey, Ifo Investment Survey, VDW database, OECD forecasts, EUROSTAT, Ifo economic forecasts, international financial consultants, International Metalworkers Federation, etc.
Following the 1992/93 recession, the German machine tool industry has undergone a buoyant expansion, supported by the auto industry and by exports. The peak of the current cycle reached its climax in 2001. In 2002 a setback will hit the industry. But already in the course of 2003 the industry will be back on the growth path. In comparison with preceding recessions the current decline of demand for machine tools is by far less serious.
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