Supply bottlenecks could occur in the short term, warns Ifo boss Fuest. And he probably hopes that the West’s diplomatic efforts will have an effect. Because the severe sanctions announced in the event of an invasion would also hit the German economy hard. The Ifo Institute calculates that the existing sanctions due to the occupation of Crimea are already reducing German economic output by around 5 billion euros a year. That corresponds to 0.16 percent of the German gross domestic product. The damage for Russia is even 1.2 percent of Russian economic output. “If further sanctions were to be imposed, they could put additional strain on the German economy, but on the Russian economy even more,” says Lisandra Flach, who heads the Center for Foreign Trade at the Ifo Institute.
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