Refugee influx may cost Germany $21.3 billion in 2016: Experts

The German Council of Economic Experts estimated additional public spending of €9 billion to €14.3 billion in 2016 related to the inflow of migrants.
The German Council of Economic Experts estimated additional public spending of €9 billion to €14.3 billion in 2016 related to the inflow of migrants.PHOTO: EPA

BERLIN (AFP) - Germany may have to spend over €14 billion (S$21.3 billion) next year to manage its record refugee influx, an expert panel said on Wednesday (Nov 11), calling the cost for the European Union's top economy "manageable".

The economists urged Berlin to speed up the processing of asylum requests and to quickly integrate refugees in the labour market as Germany braces for up to one million arrivals this year.

"The influx of refugees has shown that Germany is not immune to global problems," said the German Council of Economic Experts in its annual report to the government of Chancellor Angela Merkel.

Dubbed the five "wise men", although they include one woman, the panel estimated additional public spending of €5.9 billion to €8.3 billion this year and of €9 billion to €14.3 billion in 2016 related to the inflow of migrants.

"Given strong public finances and broad scope for efficiency-enhancing economic policy, foreseeable additional refugee-related expenditures appear manageable," they said.

Finance Minister Wolfgang Schaeuble, who has budgeted in extra spending of around €8 billion in 2016, made the same promise last week, saying Germany would be able to cope with the additional financial burden.

The panel cautioned that "successfully integrating recognised refugees requires considerable efforts in education and training" and said "the barriers to entering the job market should be lowered".

In their wider outlook, they said they expected Germany's export-driven economy to grow by 1.7 per cent this year and by 1.6 per cent in 2016, slightly faster than the euro zone average.

"Positive economic developments are likely to continue this year and next," the panel's chairman Christoph Schmidt said.

"But the arrival of refugees has made it even more important to ensure the future viability of Germany's economy by fostering the right economic conditions."