Economist Marcel Fratzscher expects the costs for the German economy to continue rising and high growth losses as a result of the Ukraine war. "The Ukraine war and the associated explosion in energy costs cost Germany almost 2.5 percent or 100 billion euros in economic output in 2022," he told the Rheinische Post. Fratzscher is President of the German Institute for Economic Research (DIW).
These costs would increase even further in the coming years. "Germany is economically more affected by the crisis because it had a higher dependence on Russian energy, has a high share of energy-intensive industries and is extremely dependent on exports and global supply chains," he said.
"Damage to Germany as a business location has not yet occurred, but will occur if companies do not massively accelerate the ecological, economic and digital transformation," continued Fratzscher.
Because higher energy prices would remain a clear competitive disadvantage in the next ten years, so that politicians and companies would have to compensate for this with higher innovation and productivity.
"The federal government should under no circumstances continue down the path of massive subsidies for fossil fuels," said the Berlin economist. "The energy price shock is therefore a painful but also necessary wake-up call that will hopefully lead to a faster transformation of the economy."
The German Chamber of Industry and Commerce (DIHK) has put the economic loss of prosperity - from the beginning of the war to the end of 2023 - at around 160 billion euros or around 2000 euros per capita. This is around four percent of the gross domestic product, said DIHK President Peter Adrian the newspaper.
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