According to a leading German research center, cities are especially hard-hit by the coronavirus pandemic in terms of finances.
According to the Munich-based ifo Institute’s report, unemployment rose faster in cities and the market environment deteriorated more than elsewhere.
“Social consumption plays a greater role in the cities. This is where the effects of the pandemic hit particularly hard,” Andreas Peichl, director of the ifo Centre for Macroeconomics and Surveys, expressed his opinion.
“Because less manufacturing is located in cities, they also benefited less from the recovery in the sector in the second half of 2020,” Peichl said.
It is too early to predict whether cities would be winners in the long run, according to the study.
On the one hand, post-crisis catch-up results are expected to favor cities more than the average. Trends such as working from home, on the other hand, may make central city locations less appealing to businesses, implying that “they may migrate to cheaper rural areas.”
