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Brexit has lasting effects on German economy: study

Xinhua, August 10, 2016 Adjust font size:

Britain's withdraw from the European Union will affect Germany for a long time, and hurt the German economy more than the whole euro zone, a study found on Wednesday.

The German Institute for Economic Research (DIW) estimated that due to Germany's economic openness and dependence on trade, its gross domestic product (GDP) would be 0.4 percent lower eight months from now than in a no-Brexit scenario.

By comparison, the Brexit would cut euro area GDP roughly by 0.2 percent.

"The German economy is suffering more from the uncertainty than is the euro area as a whole: our manufacturing sector is very export-oriented and will feel the direct effects of the weaker demand from the UK," said DIW economist Malte Rieth.

According to the Berlin-based institute, the Brexit shock will have lasting effects, even after two years, German GDP will still be below the level that would have been in a no-shock scenario.

"To reduce economic insecurity for businesses, the future relationship between Britain and the EU should be clarified as soon as possible," the institute said, urging the German government to invest more and set policies to promote business investment. Endit