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Institute of the German Economy: Corona pandemic costs the economy around 350 billion euros

2022-01-23T08:08:35.877Z


According to IW calculations, the pandemic has already caused huge damage. For 2022, the federal government expects even weaker growth than previously assumed.


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Corona measures in retail: Many citizens have held back for reasons of caution

Photo: Oliver Dietze / dpa

The corona pandemic has caused huge economic damage in the past two years.

The Institute of German Economics (IW) in Cologne comes to the conclusion in an analysis that the loss of value added is around 350 billion euros.

A large part of this is due to losses in private consumption, partly due to lockdown measures.

Even if the pre-crisis level of gross domestic product were to be reached again by the end of 2022, there would still be a “significant gap” in economic performance compared to if the pandemic had not existed, according to an IW short report. This was available to the German Press Agency. »Only with strong economic growth in the next few years can the gaps in value creation and income resulting from the pandemic be closed bit by bit.«

The new federal government expects weaker economic growth in Germany this year.

As the German Press Agency learned from government circles, the government now expects gross domestic product to grow by 3.6 percent.

In the fall, the previous government still expected growth of 4.1 percent this year.

The forecast is part of the annual economic report, which is to be decided in the cabinet on Wednesday.

  • In 2021

    , the German economy had grown again with 2.7 percent growth.

    However, the growth in gross domestic product reported by the Federal Statistical Office based on the first figures was lower than long hoped for.

  • According to the latest data, economic output collapsed by 4.6 percent in the

    crisis year

    2020 .

    The economy was primarily affected by a nationwide lockdown as well as interrupted supply chains and production outages in spring 2020 after the outbreak of the pandemic.

    Politicians had decided on aid measures worth billions to mitigate the consequences for jobs and companies.

At the beginning of January, the research and consulting company Prognos estimated that gross domestic product would grow by 4.0 percent in 2022 and by 2.8 percent in 2023.

For 2024, it expected an increase of 1.4 percent.

There were changes in behavior when it came to private consumption

According to the IW model calculation, losses in private consumption in Germany totaling 270 billion euros are likely to have occurred over the past eight quarters. The author of the analysis, Michael Grömling, explained that "behavioural changes" had also occurred in private consumption. This means that even if cinemas, theaters and restaurants were open again, many citizens would have held back for reasons of caution and refrained from going to the cinema or restaurant.

During the pandemic, the savings rate of private households increased significantly - in other words: consumers put money on the high edge.

The annual report of the “Wirtschaftswise” said that if pandemic-related restrictions or longer-lasting supply and capacity bottlenecks are overcome more quickly, the “pent-up” consumer and investment demand could ensure a more dynamic upswing.

Because significantly less was invested during the pandemic.

According to the IW study, there were "noticeable failures" in the so-called gross fixed investments, for example in machines.

If the pandemic had not existed, total investments in Germany over the past two years would have been around 60 billion euros higher in real terms.

This has a long-term slowing effect on economic development.

According to the IW, the losses in private consumption and investments are counteracted by strong impulses from state consumption - as a result of economic stimulus packages and additional spending caused by the pandemic.

Exports also provided noticeably positive economic impetus.

Nevertheless, there is a loss of value added of almost 350 billion euros.

There will also be considerable losses in the coming quarters - compared to a pandemic-free period.

The losses could amount to a further 50 billion euros in the first quarter of 2022 alone if there were significant impairments in economic life as a result of the Omicron wave.

abl/dpa

Source: spiegel

All business articles on 2022-01-23

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