Press releases

Russia is circumventing sanctions to obtain Western goods primarily via the CIS countries in Central Asia and Turkey, according to a study by the ifo Institute on trade data for sanctioned goods. The study examined goods that are critical to the Russian economy or important for the military industry, such as vehicles and ball and roller bearings.

President of the ifo Institute Clemens Fuest advocates greater strategic independence for the EU. “Since Germany’s and Europe’s prosperity is based firmly on international trade, it is particularly important here to develop the right geoeconomic strategy for potential crises,” he said at the Munich Security Conference.

Even after the coronavirus pandemic, German manufacturing is continuing to restructure its supply chains in order to reduce the risk of production losses, finds an ifo Institute survey. Companies are focused primarily on diversification. Of the companies surveyed, 58 percent have broadened their supply chains and found new suppliers in the past year. One in three companies is also planning to expand its supplier base further.

Since the start of the war in Ukraine in spring 2022, EU exports to Russia have fallen to 37 percent of their prewar level. “One reason for the still high volume of exports to Russia is that only 32 percent of all products from the EU are subject to sanctions. In the case of luxury goods, for example, there are sanctions against exports of champagne to Russia, but not of prosecco,” says Feodora Teti, Deputy Director of the ifo Center for International Economics.

Of 25 European NATO countries including Sweden only Estonia and Lithuania achieved NATO’s 2 percent target with sound public finances in 2023. This is the conclusion reached by researchers at the ifo Institute in a new EconPol study. Finland, Greece, Hungary, Latvia, Poland, Romania, and Slovakia spent more than 2 percent of their economic output on defense, but at the same time had public debt of more than 60 percent or a budget deficit of more than 3 percent in relation to economic output. This means they are above the EU’s Maastricht limits.