Putin's attack on Ukraine has caused high costs for the German economy. In addition, high energy prices put a strain on the budget.
Berlin – The German economy has many construction sites. In addition, the war in Ukraine is contributing to the slow growth of the economy. According to a calculation by the Federal Ministry of Economics, the war in Ukraine and the energy crisis have led to losses in Germany's prosperity of around 160 billion euros.
Ukraine war weakens economy in Germany
Before the Ukraine war, the federal government had assumed average price-adjusted economic growth of around 3.0 percent annually in 2022 and 2023. In fact, GDP only increased by 0.7 percent annually. In purely mathematical terms, the real difference is around four percent or around 160 billion euros, the ministry explained at the request of left-wing MP Jörg Cezanne. The answer was available to the
AFP
on Thursday (April 18, 2024).
However, the ministry emphasized that the bill is not fully informative. “It is not possible to quantify the loss of prosperity due to the overlapping negative exogenous influencing factors of the last few years, primarily the corona pandemic and the Russian war of aggression against Ukraine, which violates international law,” said the ministry. This would require knowledge of how the German economy would have developed without these shocks.
Putin's attack on Ukraine also has consequences for the German economy
The left-wing politician Cezanne criticized the federal government and urged quick action. The government is aware that there is a “glaring loss of prosperity,” Cezanne told the
AFP news agency.
“But their response to this is completely inadequate, with budget cuts and insane austerity measures.” Compensatory measures against the high gas and electricity prices were not enough, and the debt brake hindered necessary investments.
According to a calculation by the Hans Böckler Foundation for the
ARD
magazine “Panorama”, the loss of prosperity is even higher. According to this calculation, Germany lost five percent of its gross domestic product annually as a result of the Ukraine war. The basis is the International Monetary Fund's estimates from autumn 2021 for German GDP up to 2024. This is an average of around 2,600 euros per capita per year.
Because of Putin, Germany is suffering a loss of prosperity
In other countries the loss of prosperity is smaller. In Sweden it is 1,700 euros, according to Sebastian Dullien from the trade union-affiliated Hans Böckler Foundation of
ARD
, and in Italy 230 euros. The average in the EU is around 880 euros. “Germany has a few structural characteristics that have made it particularly vulnerable,” Dullien told the broadcaster. “We have a very large industrial sector. That means we use a lot of energy.” In addition, the federal government intervened in the gas markets “relatively late”.
In a study by the Kiel Institute for the World Economy (IfW) on February 14, 2024, economists assumed a loss of around $120 billion for the German economy due to the Ukraine war. “The Russian attack on Ukraine has caused enormous economic damage in Ukraine, but also in neighboring countries and in Germany,” said Moritz Schularick, co-author of the study. Third countries not involved in the war must expect a GDP loss of around 250 billion dollars by 2026, 70 billion of which in the European Union alone. (bohy with material from AFP)