Effects of deglobalisation
on Germany and Europe

 

Client

Bavarian Business Association (vbw)

Year

2023


For more than a decade, the world economic order, which has been relatively stable for decades, has been in a state of upheaval. Geopolitical tensions between democratic countries and authori-tarian states are increasing. At the centre of these tensions is the rivalry between the United States and China. On behalf of the Bavarian Business Association, Prognos outlines scenarios for a deglobalised world economy. This reveals the effects that an intensification of the disputes could have on the German and European economies.

The EU's position in a bi-polarised world economy

Should a massive economic confrontation between the US and China occur, the EU and Germany could be faced with the choice of having to choose "one side".

  • The US and a hypothetical US bloc
  • China and a hypothetical China bloc
  • Becoming a neutral player

All three decision options would entail serious negative economic consequences. An analysis of the economic links shows that European countries are the most important trading partners for both the EU countries and Germany. But economic exchange with non-European countries is also of great importance:

  • In foreign trade and imports of raw materials, links with China and the Chinese-dominated bloc predominate.
  • The USA and the US-dominated bloc are the more important partners in terms of interna-tional investment and research relations.     

Not a positive outlook. Nevertheless, being a global economic heavyweight, the EU has a strong negotiating position. It could, to some extent, try to avoid being involved in the conflict between the USA and China. The EU’s position would be strengthened if it succeeds in binding non-aligned states and non-EU countries more closely to it economically and politically.

Our approach

After outlining the scenarios, a comprehensive statistical data analysis was carried out. Prognos used, among others, the Prognos World Trade Model, multi-regional input-output calculations and data from the PATSTAT database of the European Patent Office, investment data from Eurostat and foreign trade data from the UN Comtrade database.

Links and downloads

To the study (vbw website in German)

Project team: Jakob Ambros, Dr Michael Böhmer, Philipp Anton Kreutzer, Johann Weiß

Last update: 31.07.2023

Do you have questions?

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Johann Weiß

Senior Project Manager

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Philipp Kreuzer

Project Manager

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