The influx of Syrian refugees into Germany could continue to stimulate the country’s economic growth, thus boosting government spending and the housing sector.
According to Bloomberg, Chancellor Angela Merkel now faces two problems including political uncertainty and the refugee crisis, which by the way could have not as negative consequences as expected.
Experts estimate that about 800,000 asylum seekers will contribute to German economic output growth, adding 0.2% to annual GDP in 2017.
According to the IMF, nominal German GDP is seen to add about $6 billion in extra economic activity. So the negative effect of the Volkswagen emissions cheating scandal on the economic growth would be negligible.
"The public sector directly demands more goods and services to deal with the influx of refugees and the refugees themselves boost private demand as they also spend money in Germany," said Stefan Kipar, an economist at Bayerische Landesbank in Munich. "To sum up, the refugee influx has effects comparable to an —unplanned — economic stimulus program in the short run."
Meanwhile, the demand of the government support for refugees means that a planned budget surplus for 2016 is unattainable. However, the pace of Germany’s economic recovery is apparent. The economy is forecast to expand by 1.7% on an annualized basis in the fourth quarter of 2016 and less than 2% through 2017.
