The war in Ukraine will cost Germany €175 billion ($190 billion) in Gross Domestic Product (GDP) this year, according to a report by the Institute of German Economics (IW). This equates to a loss of 2,000 euros per inhabitant.
For the calculation, the study compared the current situation to a hypothetical economic scenario in which there was no war in Ukraine and therefore no high energy prices or supply-chain disruptions. It calculated that Germany, Europe’s largest economy, will lose as high as 4.5% of GDP next year from the ongoing war in Ukraine.
The study stressed that the Ukraine war exacerbated an already difficult economic situation in Germany:
“In the past three years, Germans have had to accept enormous losses in prosperity, as the calculations show: the pandemic year 2020 already saw a loss of value added of 175 billion euros as a result of lockdowns and uncertainty. In 2021 there was another GDP loss of 125 billion euros, for 2022 losses are likely to have amounted to almost 120 billion euros. In total, the production losses will add up to 595 billion euros by the end of 2023.”
IW economist Michael Grömling said that the economic situation will remain “extremely unstable” for the year, as a result of the uncertainty in the energy sector, high prices for energy and other raw materials that threaten competitiveness, and the associated restraint in investment.
