Expert says Ukraine war expenses cost Germany more than EUR200bn


(MENAFN) As the Ukraine conflict enters its second year, Germany is grappling with the economic repercussions of decisions made since its onset, with estimated costs exceeding EUR200 billion (USD216 billion), according to Marcel Fratzscher, the president of the German Institute for Economic Research. The rising energy prices, triggered by Germany's strategic shift away from inexpensive Russian gas in the wake of Moscow's offensive against Ukraine, have been identified as a primary contributing factor.

In an interview with Die Rheinische Post, Fratzscher highlighted the substantial economic impact on Germany, emphasizing that the decision to forgo Russian energy sources led to the adoption of costlier alternatives, including American liquefied natural gas. The estimated economic losses for 2022 alone amount to around EUR100 billion, with a subsequent 2.5 percent contraction in growth. Fratzscher projected a comparable decline in the German economy for 2023.

The accelerated inflation in Germany, a consequence of the strategic energy decisions, has disproportionately affected low-income workers, exacerbating economic challenges. Fratzscher's assessment aligns with a yet-to-be-released report from the German Economic Institute, indicating a total loss of EUR240 billion in 2022-2023 due to the combined negative impacts of the Covid-19 pandemic and the ongoing Ukraine conflict.

The newspaper report also highlighted the findings of the German Economic Institute, which echoed Fratzscher's concerns and emphasized the adverse effects of government policies during this period. The decision to phase out nuclear energy production was cited as a particular point of contention, contributing to the overall economic challenges faced by Germany.

As Germany navigates the complex economic landscape shaped by geopolitical conflicts and strategic energy decisions, experts warn of a prolonged impact that could continue to shape the nation's economic trajectory. The intersection of global events, government policies, and shifting energy dynamics poses challenges for Germany's economic recovery, prompting a reassessment of strategic choices and potential measures to mitigate the ongoing economic fallout.

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