DIHK: The war in Ukraine will cost Germany roughly four percent of GDP

DIHK: The war in Ukraine will cost Germany roughly four percent of GDP

DIHK: The war in Ukraine will cost Germany roughly four percent of GDP

Illustration photo – Press conference in the chancellor's office after the video conference with the heads of government of the G7 countries. German Social Democratic politician and Chancellor of the Federal Republic of Germany Olaf Scholz is pictured in Berlin on December 12, 2022.

Berlin – The war in Ukraine will cost the German economy around 160 billion euros (3.8 trillion CZK) by the end of this year, which corresponds to roughly four percent of the gross domestic product (GDP). This was stated by the head of the German Chamber of Industry and Commerce (DIHK) Peter Adrian in an interview with the newspaper Rheinische Post. According to him, the war will reduce the German GDP by 2,000 euros (almost 50,000 CZK) per person, Reuters wrote.

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In the German economy, industry has a relatively high presence, in which many sectors are energy-intensive. The German economy was thus significantly affected by the sharp rise in energy prices as a result of the Russian attack on Ukraine, Reuters points out.

According to a January study by the credit insurance company Allianz Trade, German industry will pay about 40 percent more for energy this year than in 2021, i.e. before the war in Ukraine. “The prospects for economic growth this year and next are therefore weaker than in many other countries,” said Adrian. “The price of gas (in Germany) is about three to five times higher than in the United States,” he pointed out. He added that electricity is roughly four times more expensive than in France.

Germany has long relied on relatively cheap gas from Russia, while the United States uses its own gas sources, Reuters writes. Germany has also decided to abandon nuclear power, while France continues to use it on a large scale and plans to develop it further. Recently, however, France has been struggling with a decline in the production of nuclear power plants due to maintenance work and repairs.

Germany is the largest economy in Europe and the largest trading partner of the Czech Republic. In January, the German government improved this year's outlook for the German economy from the previously predicted decline to moderate growth. According to the January government forecast, Germany's GDP will increase by 0.2 percent. In the October outlook, the government predicted that GDP would fall by 0.4 percent this year.