Germany’s $7 Billion Refugee Boost to Outweigh vw Scandal Fallout

As she celebrates her 10-year anniversary in office, German Chancellor Angela Merkel faces two crises. While the political fallout still is uncertain, in economic terms the positive impetus from European refugee influx is due to more than offset the negative effect of the Volkswagen emissions cheating scandal.

The expected absorption of some 800,000 asylum seekers into Germany, many fleeing the violence in Syria, will add 0.2 percentage point to annual growth next year, according to the median estimate in a Bloomberg survey of 24 economists, conducted Nov. 6-13.

The VW scandal’s impact will be negligible, lowering 2016 growth by just 0.03 percentage point. Based on the IMF’s October estimate of nominal German gross domestic product, the combined impact translates into roughly $6 billion in extra economic activity next year.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.