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Health IFO: Decoupling of autocrats such as China costs prosperity

15:10  08 august  2022
15:10  08 august  2022 Source:   wiwo.de

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An economic decoupling of China and other authoritarian states would mean great wealth losses for Germany, according to the IFO Institute.

Die Autoindustrie ist ein wichtiger Pfeiler der deutschen Wirtschaft. Bei einer Abkehr der EU von China könnte sie stark darunter leiden. © Hendrik Schmidt/DPA central image/dpa The auto industry is an important pillar of the German economy. When the EU's departure from China, it could suffer greatly.

on the one hand would break down sales markets, on the other hand, preliminary products and raw materials for German industry would be more expensive, the Munich economists write in a paper published in Munich on Monday under the leadership of IFO President Clemens Fuest. The client was the association of the Bavarian economy (VBW). The “Süddeutsche Zeitung” had previously reported.

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alone A mutual decoupling of the EU of China would therefore hit the German industry very hard and let its competitiveness decrease, especially car manufacturers and mechanical engineering. According to the IFO calculation, higher import duties and other trade barriers on both sides would reduce the German gross domestic product by 0.81 percent, i.e. cost a considerable proportion of total economic growth. In addition, the IFO researchers emphasize that this is only the lower limits of the expected losses. Accordingly, only comparatively small areas such as the textile industry would benefit.


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deglobalization could endanger political stability

also affirms previous IFO examinations that a return of industrial production to Germany or neighboring countries would mean enormous wealth losses. In the event of comprehensive retreat to Germany, the German gross domestic product would therefore decrease by almost 10 percent. "Deglobalization could not only lead to increased unemployment and less growth, but ultimately also endanger the political stability of the country," warn the authors in the paper. The IFO Institute recommends a reduction in one-sided dependencies and diversification of the supply chains.

«Fact is, however, that we have to adhere to our basic business model of internationalization,» summarized VBW general manager Bertram Brossardt for the clients.

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