AfD government could reduce Saxony-Anhalt's economic growth: IWH

Saxony-Anhalt could face a significant economic downturn if the Alternative for Germany (AfD) party forms the next state government, warns Reint Gropp, president of the Halle Institute for Economic Research (IWH).

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Xenophobic policy is bad for the economy. Preliminary estimates show that economic growth in Saxony-Anhalt could decrease by about half to one percent per year.

Gropp estimates that an AfD government might lead to a reduction in economic growth of between 0.5 and 1 percent per year. He attributes this projection to the potential for "xenophobic policies" to negatively impact the economy. "Foreigner-hostile policy is bad for the economy," Gropp stated in an interview with the "Süddeutsche Zeitung."

The economist highlighted that current economic growth in Saxony-Anhalt is largely fueled by immigration, noting a decline in the German workforce. He explained that the added value created by immigrants, particularly in sectors like food production, construction, gastronomy, and logistics, would be lost. These sectors currently have a high proportion of foreign workers, ranging from 33 to 40 percent.

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We can sort the added value that immigrants create by specific jobs and sectors. This added value would then be lost.

Gropp's assessment draws on research into regions that have experienced the rise of right-wing populist parties, including Sonnenberg in Thuringia, the UK post-Brexit, and northern Italian municipalities governed by the Lega Nord. In these areas, Gropp observed a decrease in immigration, a trend he anticipates for Saxony-Anhalt. With state elections approaching in two weeks, the AfD is leading in opinion polls, potentially unseating the current CDU, SPD, and FDP coalition.

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In the areas we examined, immigration has decreased. We can then expect something similar in Saxony-Anhalt.