Status: 01/23/2022 11:48 a.m
According to a study, the German economy has suffered damage of around 350 billion euros since the beginning of the corona pandemic. Experts hope that the omicron variant will stop the negative trend.
The corona pandemic has caused huge economic damage in the past two years. In an analysis, the Institute of German Economics (IW) in Cologne comes to the conclusion that the so-called loss of value added is around 350 billion euros.
Less consumption through lockdown
A large part of this is due to losses in private consumption – partly due to lockdown measures – the IW calculated. In addition, there would also be reduced investments by companies. In the first three months of this year, there may be further defaults of 50 billion euros, the institute explained.
“The recovery will take years,” says the analysis. Even if the pre-crisis level of gross domestic product were to be reached again by the end of 2022, there would still be a “significant gap” in economic performance compared to if the pandemic had not existed.
supply chain problems
At the beginning of the pandemic, the lockdown measures led to problems with production processes and disrupted deliveries at home and abroad. There were also costs due to limited consumption options and cautious customers. Business with other countries fell sharply. As a result, real gross domestic product (GDP) fell by eleven percent in the second quarter of 2020 compared to the previous year.
As the pandemic progressed, the number of infections that had fallen in the meantime repeatedly raised hopes of a lasting recovery – but this was clouded by renewed waves of infections. According to the study, problems in supply chains were crucial in the second year of Corona: missing components were particularly difficult for the automotive industry. The IW explained that government spending during the pandemic and exports had at least partially absorbed the German economy in the second year.
Economists hope for an endemic phase
“However, the new Omicron variant also gives reason for hope,” explained IW economist Michael Grömling. “Should we enter the endemic phase this year, things should go up again.” Strong growth will then be needed in the next few years to make up for the losses.
The federal government is expecting weaker growth in gross domestic product of 3.6 percent this year, as reported by the dpa news agency, citing government circles. In the fall, the previous government still expected growth of 4.1 percent this year. The forecast is part of the annual economic report, which is to be decided in the cabinet on Wednesday.