Russia-Ukraine war to cost German economy €90B: Report

By Ovunc Kutlu

ANKARA (AA) – Economic turmoil caused by Russia’s war on Ukraine is likely to cost Germany a total of around €90 billion ($100 billion) in economic output this year and next, according to a report released on Thursday.

The war in Ukraine “significantly burdens” and is putting “a noticeable strain” on the German economy and also increases the already strong inflationary pressure, the Kiel Institute for the World Economy said.

“The Ukraine shock delays the return to pre-COVID-19 levels into the second half of the year. Production capacity will remain underutilized until the end of the year and economic output will therefore remain below potential,” read a statement by the research institute.

The institute revised its forecast for economic output growth in Germany this year to 2.1%, significantly lower than its previous estimate of 4%.

It also expects inflation to rise to 5.8% this year, the highest level since reunification in 1990.

“Without the strong post-pandemic boost, German economic output would be down this year,” said Stefan Kooths, economic forecast head and vice president of the institute.

“The economy in Germany and worldwide is subject to opposing forces. The strong upward and catch-up effects following the removal of most infection control measures are offset by the shock waves resulting from the Ukraine war,” he added.

Germany’s energy import bill in 2022 is likely to be around €40 billion higher than the estimate made in December 2021, according to the institute.