Germany faces possible $265 billion loss in added value as a byproduct of war and high energy prices
Germany faces massive economic loss in the face of war and high energy prices
Germany's economy will lose more than 260 billion euros ($265 billion) in added value by 2030 due to the Ukraine war and high energy prices, spelling negative effects for the labor market, according to a study by the Institute for Employment Research (IAB).
In comparison with expectations for a peaceful Europe, Germany's price-adjusted gross domestic product (GDP) will be 1.7% lower next year and there will be about 240,000 fewer people in employment, said the study published on Tuesday.
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The employment level is expected to stay at around this level until 2026, when expansive measures will gradually begin to outweigh the negative effects and lead to a plus of about 60,000 gainfully employed in 2030.
One of the big losers will be the hospitality industry, which was already hit hard by the coronavirus pandemic and is likely to feel the pinch of consumers' waning purchasing power.
As war between Russia and Ukraine rages on, high gas prices threaten to sink Germany's economy. Pictured: A manometer outside gas trading company VNG AG in Bad Lauchstaedt, Germany, on July 28, 2022. (REUTERS/Annegret Hilse / Reuters)
Energy-intensive sectors, such as the chemical industry and metal production, are also especially likely to be affected.
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If energy prices, which have so far shot up by 160%, were to double again, Germany's 2023 economic output would be almost 4% lower than it would have been without the war, according to the study. Under these assumptions, 660,000 fewer people would be employed after three years and still 60,000 fewer in 2030, it said.