ifo Institute: Coronavirus Costs Bavaria’s Economy Billions in Losses
The coronavirus could cost the Bavarian economy several billion euros. This is the result of the ifo Institute’s recent calculations. “If companies are closed down for a period of two months, the costs already go as high as EUR 49 to 94 billion, depending on the assumptions made. That would lower annual growth by between 7.7 and 15.0 percentage points; if the closures go on for three months, the costs go up to EUR 68 to 138 billion, which represents a loss of growth of 10.8 to 22.1 percentage points. This means that Bavaria is under a somewhat greater threat than the rest of Germany,” says ifo President Clemens Fuest.
“The high costs of the shutdown illustrate that it is worth investing even extremely large additional sums in health protection to facilitate a gradual easing of the shutdown while still stopping the epidemic,” Fuest says.
The ifo Institute calculated the loss of value added during the period of production interruption, follow-up costs in the form of a delayed return to normal economic activity, and permanent impairment as a result of bankruptcies or the loss of business relations during the crisis.
Just a single week’s extension of the partial shutdown will incur additional costs for Bavaria of EUR 5 to 11 billion, and thus a decline in annual economic output of 0.8 to 1.8 percentage points. An extension of one to two months drives up costs to as much as EUR 37 billion, equivalent to 7.1 percentage points of growth.
Publication (in German)
The Economic Costs of the Coronavirus Shutdown for Bavaria: A Scenario Calculation
ifo Institute, Munich, 2020
ifo Schnelldienst digital, 2020, 1, No. 02, 01-02
Die volkswirtschaftlichen Kosten des Corona-Shutdown für Deutschland: Eine Szenarienrechnung
ifo Institut, München, 2020
ifo Schnelldienst, 2020, 73, Nr. 04
Anhang: Volkswirtschaftliche Kosten des Corona-Shutdown: Annahmen zu den sechs berechneten Szenarien
