— This is the script of CNBC's news report for China's CCTV on July 19, 2021, Monday.
Like what German president Frank-Walter Steinmeier has said, it will take some time to assess the economic damage caused by the floods. But the 2013 flood could provide us with some clues. International insurance company AXA along with the risk studies center at the business school of Cambridge University released a case study on the 2013 floods. The 2013 floods cost the German economy 6.7 to 9.1 billion U.S. dollars. Private properties accounted for approximately 22% of all losses, with each household losing $56,000 on average. 35% of household losses were covered by insurance. The rest were borne by private savings, loans, and government aid.
Infrastructure and emergency services were the hardest hit, accounting for nearly half of the total losses. The report pointed out that 88% of businesses reported losses after the floods. Disruption to business activities costs $12.9 billion, with manufacturing and commercial activities such as hotels, restaurants, and transportation being most affected. The number of agriculture losses exceeds $1 billion. The floods' impact on agriculture is also closely watched this time. The Brussels Times points out that on top of heavy rains, soil erosion is another major problem amongst affected nations.
Reconstruction is crucial. In 2013, aid pledged by the federal and local governments of Germany amounted to over 10 billion. And this time, German chancellor Angela Merkel is also asking for more budget support for reconstruction on top of the already announced emergency aid. Based on the study of the 2013 floods, the majority of damaged parts can be rebuilt within two years, but it can take up to 6 to 7 years for the properties and economy to fully recover. And just like 2013 when floods hit the nation, Germany is now again sitting around an economic low point. The country is trying to recover from the pandemic, like many other economies, yet the floods may drag down its growth.
In addition to economic losses, floods can also bring about widespread and far-reaching social impacts. The casualties this time are particularly heavy, and many people have been evacuated due to the flooding. And the German federal election is just about two months away, so the response to the floods could also impact the votes. When visiting the impacted areas, the current CDU leader Armin Laschet, who is widely regarded as Merkel's successor, was caught on camera laughing. That has triggered public anger, and he subsequently apologized.