BERLIN, (Reuters) – Germany’s VDMA engineering group cut Monday’s forecast for 2022 machinery production growth. The conflict in Ukraine, global supply chain challenges and lockdowns throughout China overtook the industry’s robust order backlog.

VDMA announced that the VDMA now anticipates growth of production of industrial machinery with the “Made in Germany” tag to be 1% in 2022. This is after it reduced its forecast to 4%, from 7% just two months prior. The production increased 6.4% in the last year.

Russia is a traditional export market because of its low investments in local production. But, it can be extremely painful for individuals companies to lose this market,” VDMA President Karl Haeusgen stated in a statement.

He said that 80% of Russian companies regarded their prospects for business in Russia before Russia invaded Ukraine. Now 75% of them expect the situation to worsen in six months, or even want to leave it.

Haeusgen stated, “This is a clear indication of the impact that war has had on everything.”

He stated that even if war is resolved quickly and Ukraine gains its territorial sovereignty back, it will be many years before Russian companies are able to establish a trusting relationship with them.

Machines accounted for a large portion of 26.6 million euros (28.53 Billion) in German goods exported to Russia last fiscal year.

($1 = 0.9322 euros)