Exchange rate mainly affects low-tech sector

The Business sentiment survey asks manufacturers to evaluate their competitive position. Their opinions appear to rely strongly on the euro-dollar exchange rate.

Manufacturers negative when euro rate is high

In 1997, the euro dropped 14 percent against the US dollar. Manufacturers were very positive about their competitive position in that year. Conversely, when the euro gains against the US dollar, manufacturers are negative about their competitive position.

Exchange rate and evaluation competitive position

Low tech sector vulnerable

The relationship between competitive position and exchange rate mainly applies to the so-called low tech sector, a sector characterised by fairly simple production processes, such as textile and paper production. The high tech sector with technically advanced manufacturing processes appears to be less vulnerable. The high tech sector includes, for example, the production of state-of-the-art medical equipment.

Exchange rate and evaluation of competitive position by sector

Arjan Neefs