Study: Crises cost Germany almost €1 trillion

The economic costs of the ongoing crises of recent years for Germany now total €940 billion ($1.11 billion), according to a study by the German Economic Institute (IW) published on Saturday.

The pro-business think tank calculated the figure for the six years since 2020 in terms of price-adjusted gross domestic product (GDP).

Per employee, this corresponds to a loss of value added of well over €20,000 due to the Covid-19 pandemic, the effects of Russia’s war against Ukraine and the confrontational policies of the United States.

IW experts calculated that a quarter of the huge total is attributable to last year, which was marked by customs conflicts with the administration of US President Donald Trump.

According to official figures, the German economy narrowly avoided a third consecutive year without economic growth in 2025, with economic output increasing by 0.2 percentage points in real terms.

Economy more severely affected than in previous crises

“The current decade has so far been marked by extraordinary shocks and enormous economic adjustment burdens, which now significantly exceed the level of stress experienced in previous crises,” said IW researcher Michael Grömling.

According to calculations, the economic costs of the period of stagnation from 2001 to 2004 amounted to around €360 billion in real terms (adjusted for inflation).

The financial market crisis of 2008-09 resulted in a loss of value added of around €525 billion.

Gap still widening

In order to calculate the extent of the economic losses, the IW’s Grömling compared the actual economic development with a hypothetical scenario without the aforementioned crises.

Based on the assumption that without these crises, economic activity would have continued to develop at the average pace of the last three decades, the analysis found that there were “significant and increasing economic losses.”

“After recovering from the pandemic shock, economic activity in Germany has not exceeded the 2019 level for three years now,” concluded Grömling.

“Due to this de facto stagnation and an assumed counterfactual continued upward trend, the gap has widened further and further, and losses have increased continuously and significantly in recent years.”