DIW: The war in Ukraine reduced the performance of the German economy by 100 billion euros last year

DIW: The war in Ukraine reduced the performance of the German economy by 100 billion euros last year

DIW: The war in Ukraine last year reduced the output of the German economy by 100 billion euros

Illustrative 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 and the related sharp rise in energy costs last year reduced the performance of the German economy by almost 2.5 percent, i.e. roughly 100 billion euros (2.4 trillion CZK). According to the DPA agency, the head of the Berlin research institute DIW, Marcel Fratzscher, stated this in an interview published today by the German newspaper Rheinische Post. He added that the negative effects of the war in Ukraine on Germany's economic performance will continue this year. Germany's central bank said today that while the outlook for the German economy is improving, gross domestic product (GDP) could contract again in the first quarter. The German economy would thus fall into a technical recession.

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The head of the German Chamber of Industry and Commerce (DIHK), Peter Adrian, in an interview with the Rheinische Post last week, predicted that the war in Ukraine will cost the German economy around 160 billion euros (CZK 3.8 trillion) by the end of this year. He pointed out that this represents roughly 2,000 euros (almost 50,000 CZK) per person.

“Germany is facing stronger economic impacts of the crisis because it was more dependent on Russian energy, has a high share of energy-intensive industry and is extremely dependent on exports and global supply chains,” said Fratzscher.

According to a January study by credit insurance company Allianz Trade, German industry will pay roughly 40 percent more for energy this year than in 2021, i.e. before the war in Ukraine.


Germany is the largest economy in Europe and the largest trading partner of the Czech Republic. According to the Federal Statistical Office, the growth of the German economy slowed to 1.8 percent last year from 2.6 percent the year before.

In January, the German government improved this year's outlook for the German economy from the previously expected 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.

“The short-term outlook is now more favorable than a few months ago,” the German central bank said today in its regular monthly report on the development of the economy. “At the turn of the year, the mood among entrepreneurs and consumers improved slightly worldwide, fears of economic recession subsided somewhat. This was probably due to the significant easing of the European energy crisis,” she added.

In the fourth quarter of last year, the German economy fell by 0.2 percent against the previous three months. “In this year's first quarter, the performance of the economy could again be lower than in the previous quarter,” the central bank predicted today. Two consecutive quarterly declines in the economy are usually referred to as a technical recession.

The central bank also said that inflation in Germany had already reached its peak. But she warned that wages are now experiencing rapid growth, creating a new wave of price pressures that will slow the decline in inflation. She predicted that inflation would thus remain above the two percent target set by the European Central Bank (ECB) for the eurozone for a longer period of time.