According to Deutsche Wirtschafts Nachrichten (DWN), the German economy was caught between two fires. It was greatly damaged by both the coronavirus pandemic and the Russia-Ukraine conflict.
Representatives of the German Economic Institute (IW) suppose that these catastrophic events cost Germany €420 billion. Estimates revealed that the pandemic and the crisis in Ukraine pushed Germany’s economy back by many years and led to serious losses.
Researchers at IW suppose that the local economy has been in crisis for the third year in a row due to lockdowns, a decline in purchasing power amid high inflation, and energy supply disruptions caused by geopolitical issues.
According to the estimates provided by the German Economic Institute (IW), the COVID-19 pandemic and the war in Ukraine have considerably affected Germany’s economy during the period from 2020 up to now. Against the backdrop, the German economy has lost €420 billion.
Analysts think that this winter, the eurozone's largest economy will tip into a recession. The Association of German Chambers of Commerce and Industry (DIHK) predicts that in 2023, the country’s GDP will fall by 3%. The situation is also aggravated by problems with energy and commodities supply caused by a long-lasting geopolitical conflict.
In this light, aggregate demand has shown a slump. Inflation started surging amid limited consumption spurred by several waves of the coronavirus pandemic. As a result, households’ purchasing power has declined considerably since the 1950s. What is more, the economic outlook remains unclear. That is why most companies avoid investing.
