The Russian aggression and invasion of Ukraine is dominating everyone’s agenda. Next to the humanitarian catastrophe, it’s the impact on the economy that keeps political and industrial leaders up at night. As the German Economic Institute we have also been crunching numbers and assessing dependencies and effects of sanctions and disruptions, such as the question on whether Europe can cope with an import stop of Russian gas, analysed by our researchers Andreas Fischer and Malte Küper or the hot topic of Russian cyber warfare and how it threatens European business, described by our researcher Vera Demary.
Even before the Russian attack on Ukraine, Europe’s economies had to deal with inflation, which is in itself already problematic but could become even more dangerous if it turns into a stagflation. Our Director Michael Hüther and senior researcher Markus Demary had this topic on their radar, and discussed the risks of stagflation in the Eurozone already prior to recent geopolitical events that might aggravate the situation.
Supply constraints play an important role in this context. So, our colleagues Galina Kolev and Adriana Neligan took a look at how new EU supply chain regulation will affect businesses. Their insights are being complemented by a deeper dive into the where the German pharmaceutical industry resources its inputs, by researcher Jasmina Kirchhoff. Her analysis was motivated by the pandemic-related call for more reshoring of industrial production, which is promoted by some as improving the resilience of the EU’s economy. But perhaps this resilience should rather be assessed with the reform of the Stability and Growth Pact in mind, argues IW economist Jürgen Matthes.
The large debts, which are weighing on other national budgets even more heavily than on the German, still are a burden for the German state, not least with regard to statutory pensions. Their level is set to decline systematically, creating quite a concern for future retirees, shows our researcher Ruth Maria Schüler. Immigration could potentially help cushion the implications of the demographic change and secure growth and prosperity but that requires more action in migration policy at the local level, says our researcher Wido Geis-Thöne.