World Economy

Refugees to Cost Germany $60b p.a.

Refugees to Cost Germany $60b p.a.Refugees to Cost Germany $60b p.a.

An influx of a million refugees could cost Germany up to €55 billion ($60.46 billion) a year, according to a study by a prominent economic research center. The researchers said the financial burden was manageable.

Depending on the number of refugees coming to Germany over the next few years, the annual cost to Germany could range between €25 and 55 billion, according to a study by Kiel Institute for the World Economy published on Friday, DW reported.

With a million refugees expected in Germany this year, the annual cost would be €55 billion, the study found. But under the assumption the number drops to 360,000 refugees from 2018, annual costs could drop to €25 billion annually.

Matthias Luecke, the author of the study, recognized the figures are not solid due to variables such as the number of refugees that arrive in Germany, how long they stay and how quickly they integrate and find employment.

One assumption in the estimate is that 30% of refugees would return to their homeland, and another 20% would have trouble finding a job.

“Overall, there are naturally significant uncertainties around the estimates, especially the number of incoming refugees and the rate at which they can be integrated into the labor market,” Luecke said.

In contrast to other studies finding refugees could add to Germany’s aging labor force and contribute positively to the economy, the IfW research found the refugee influx would not have an overall positive impact on prosperity.

The study found that while refugees may increase demand and economic output, thereby contributing to growth, the social welfare expenditures would also increase and counteract overall gains in prosperity.

Another study by the German Institute for Economic Research released last month found that while there are initial costs to accepting and integrating refugees, after roughly five years the investment in refugees begins to pay off over several decades as they participate in the workforce.

Still, even with the high-end estimate of €55 billion, or 2% of GDP, Lueke said the cost would be manageable for German finances and the economy.