E/D/E ANNUAL REPORT 2017 Economic conditions According to calculations published by Germany’s Federal Statistical Office the German economy grew by 2.2 percent (GDP, after adjustment for in- flation) in 2017 – the strongest result since 2011. In 2017, growth impetus came predominantly from domestic sources: gross fixed capital formation saw above-average growth (up 3.0 percent). In addition to construction investments, which rose by 2.6 percent, this includes equipment – machinery and appliances in particular, but also vehicles. Investment there was up by 3.5 percent over the pre- vious year, adjusted for inflation. The EU as a whole, as well as the Euro zone, remained on a growth course. Netherlands with 3.2 percent and Spain with 3.1 percent (provisional figures as at 24/04/2018). The growth dynamics in other EU countries were clearly more subdued; Italy saw a 1.5 percent increase and France 1.8 percent (provisional figures as at 24/04/2018). In an assessment of the key industrial B2B sectors, the German Mechanical Engineering Industry Association VDMA) reports that the engi- ( neering sector performed far better in 2017 than in the previous year, with nominal turnover growth of 4.5 percent and an increase in production output of 3.1 percent. According to the Central Association of the Eurostat reported an increase of 2.4 percent on average for the EU-28 in 2017. Some important E/D/E partner countries experienced particularly strong growth, for example the German Construction Industry (ZDB), the main construction industry recorded growth of 4.0 percent in 2017. The sanitary wholesale trade in Germany also made good pro- gress, according to the Institute for Retail Research in Cologne (IFH Köln), with an increase of 3.5 percent. The E/D/E “Konjunkturreport”, a quarterly economic report, confirms that the impact of positive conditions was pre- dominantly felt in our industries in the fourth quarter of 2017. Across the entire member group, an average in- crease in turnover of 3.2 percent per company was recorded for the fourth quarter of 2017. In the sub-sectors of tools, construction, technical trade/ PPE, building services and steel, there was a range of results in turnover, earnings and order situation (accord- ing to customer groups). Overall, the first quarter of 2018 saw a continuation of the positive trend, with turnover per company again increasing by an average of 3.2 percent. Of the companies surveyed, 96 percent are expecting a better or more stable course for the next few months. Trading volume development (in EUR million) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Projection 9 8 6 , 3 6 0 0 2 9 9 0 , 4 7 0 0 2 8 8 5 , 4 8 0 0 2 5 7 0 , 4 9 0 0 2 6 1 6 , 4 0 1 0 2 4 0 2 , 5 1 1 0 2 0 1 3 , 5 2 1 0 2 1 9 1 , 5 3 1 0 2 9 1 3 , 5 4 1 0 2 8 9 4 , 5 5 1 0 2 6 5 5 , 5 6 1 0 2 3 4 0 , 6 7 1 0 2 9 6 2 , 6 8 1 0 2 18