Permanent crises cost Germany almost a trillion euros

The economic costs of the permanent crisis of the past few years for Deutschland are now adding up according to IW estimates to almost a trillion euros.

For the six years since 2020, the result is: Loss of price-adjusted gross domestic product (GDP) totaling 940 billion euros, calculates the employer-related Institute of German Economy (IW) before.

This corresponds to a loss of value added of significantly more than 20,000 euros per employed person as a result of the corona pandemic, the effects of the Russian war against Ukraine and the confrontational politics of the USA.

According to the calculations, a quarter of the huge total amount was attributable to the past year, which was marked by customs conflicts with the government of US President Donald Trump. According to official figures, the German economy narrowly missed the third year in a row without economic growth in 2025, with real economic output increasing by 0.2 percent.

The economy is under greater strain than in previous crises

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

According to the calculations, the economic costs of the stagnation period from 2001 to 2004, adjusted for prices (in real terms), were around 360 billion euros; for the financial market crisis of 2008/2009, there were losses in value creation of around 525 billion euros.

Scissors keep opening

In order to calculate the extent of the economic losses, IW researcher Grömling compared the actual economic development with a hypothetical scenario without the crises mentioned. Based on the assumption that without these crises, economic life would have developed at the average pace of the last three decades, “significant and increasing economic failures” resulted, according to the analysis.

“After recovering from the pandemic shock, economic activity in Germany has not exceeded the 2019 level for three years,” writes Grömling. “Due to this de facto stagnation and an assumed counterfactual upward trend, the gap has so far opened wider and the economic losses have increased consistently and significantly in recent years.”