The Russo-Ukrainian war, which is fast approaching its one-year mark, is set to cost the German economy approximately €175 billion this year, according to figures cited in a report by the Institute for German Economy (IW), a think tank that promotes economic liberalism.
If the calculations of the Cologne-based think tank are correct, the direct cost for each individual living in Germany this year can be estimated at €2,000. Also, per the IW’s projections, due to high energy prices and supply bottlenecks, the German economy is due to witness a price-adjusted loss of about 4.5% of its gross domestic product (GDP) in 2023, Die Welt reports.
The IW underscored that the present challenges come on top of an already difficult economic situation for the country—one in part precipitated by a shortage of skilled workers and moderate productivity development.
Furthermore, Germans have already witnessed colossal losses in prosperity over the past three years as a result of lockdowns and other factors associated with the COVID-19 pandemic that have wreaked havoc on the economy. As IW notes, the pandemic year of 2020 resulted in a loss of added value of €175 billion, while in 2021 and 2022, GDP losses added up to €125 billion and nearly €120 billion, respectively. Thus, between 2020 and the end of 2023, the German economy will have lost €595 billion.
Speaking about Germany’s less-than-rosy economic situation, IW economist Michael Grömling explained that conditions “remain very fragile,” and warned that “the exceptional situation will continue to occupy us in the coming months and weigh on prosperity.”