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Germany Losing 1.6 Percent of GDP to Cybercrime, Says New Study

Germany Losing 1.6 Percent of GDP to Cybercrime, Says New Study

An astonishing 1.6 percent of Germany’s GDP is being lost to cybercrime, a new study has found. In total, the report by the Center for Strategic and International Studies (CSIS), sponsored by online security firm McAfee, put the total cost to the global economy at $445 billion (€328.5bn), with some 150,000 jobs affected in Europe alone.

The G20 countries are the most hit, with nearly half of the global total of losses being suffered by the four largest economies – the US, China, Japan and Germany.

But with losses of about 1.6 percent of its GDP, Germany suffers the most comparatively – the Netherlands is second at 1.5 percent, followed by the US and Norway on 0.64 percent and China on 0.63 percent.

Part of the discrepancy, however, may be down to the fact that Germany records a lot more of the damage it suffers compared to, say, the UK.

Cybercrime has a negative effect on businesses in general and on trade, innovation, competitiveness and economic growth. According to the study – titled ‘Net Losses: Estimating the Global Cost of Cybercrime’ – the global Internet-driven economy generates revenues somewhere between 2 and 3 trillion dollars, a figure that is sure to soar even higher in the coming years, but 15 to 20 percent of this is being lost to cybercrime networks.

The theft of intellectual property (IP)in particular is a problem in industrialised countries where IP creation and IP-intensive industries are especially important for wealth creation, making them even more attractive to criminals and seeing more losses in trade, jobs and income.

“Cybercrime is a tax on innovation and slows the pace of global innovation by reducing the rate of return to innovators and investors,” said Jim Lewis of CSIS. “For developed countries, cybercrime has serious implications for employment. The effect of cybercrime is to shift employment away from jobs that create the most value. Even small changes in GDP can affect employment.”

The study also tracked high-profile data breaches around the world, with around 16 million people in Germany said to have had personal information hacked – one in five of the population.

Some of the losses which emanate from cybercrime are recovery costs, including the clean up which must be done to secure information – the report said that even if criminals cannot necessarily make use of all the data they steal, the victims must act as if they could, and spend large sums of money in doing so.

Governments are, however, beginning to make more serious efforts at collecting and publishing data on cybercrime to enable better co-operation. Those efforts are starting to see results, such as the recent takedown of a crime ring associated with the GameOver Zeus botnet which involved 11 different countries.

“It’s clear that there’s a real tangible economic impact associated with stopping cybercrime,” said Scott Montgomery, chief technology officer, public sector at McAfee. “Over the years, cybercrime has become a growth industry, but that can be changed, with greater collaboration between nations, and improved public private partnerships. The technology exists to keep financial information and intellectual property safe, and when we do so, we create opportunities for positive economic growth and job creation worldwide.”

For all that Germans take their privacy more seriously than many of their neighbours, it seems that they are suffering more than most when it comes to cybercrime – a trend which will surely influence the development of technology in Germany in the coming years.

About David Knight

David is co-founder and Editor-in-Chief of Silicon Allee. Originally from London, he has lived in Berlin for over seven years, having previously worked for news portals including Bild.de and Spiegel Online before helping to found Silicon Allee in 2011.

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