An immediate European embargo on Russian gas could cost Germany, which is heavily dependent on the resource, up to 5% of its GDP this year, according to an estimate by the Deutsche Bundesbank released on Friday.
An immediate European embargo on Russian gas could cost Germany dearly, according to an estimate by the Deutsche Bundesbank.
“Germany’s real GDP could be up to 5% lower than forecast” in the event of a voluntary or sudden halt to Russian gas imports, the Bundesbank explained in its monthly economic report for April.
This corresponds to a loss of “180 billion euros” for national production, she added.
In such a scenario, the German economy could experience a 2% recession this year, the study estimates.
Even more inflation
Inflation, already galloping in the country, could gain “1.5 points in 2022” and “2 points in 2023” compared to a no-embargo scenario, according to the institution.
An embargo on Russian gas has been the subject of bitter debates among EU member states since the late February invasion of Ukraine by Moscow, which derives most of its resources from the sale of hydrocarbons.
Olaf Scholz’s German government is one of the main opponents of an immediate import ban because it is about economic and social peace in the country, with consequences for other EU economies.
This refusal arouses the anger of Kiev and several European governments.
Germany, and its industry in particular, is particularly dependent on this resource, which accounted for 55% of its total gas imports before the conflict.
“I don’t see at all how a gas embargo can end the war,” repeated Chancellor Olaf Scholz in an interview with the weekly newspaper Der Spiegel on Friday.
“We want to avoid a dramatic economic crisis, the loss of millions of jobs and factories that would never open again,” he added.
However, Germany has already reduced its Russian imports to 40% of the total in the first quarter of 2022 by stepping up efforts to find other suppliers such as Qatar or the United States.
The country also recently approved a budget of three billion euros to equip itself with floating terminals for large quantities of liquefied natural gas (LNG), which it currently does not have.
However, Germany does not plan to be able to give up Russian gas before mid-2024, according to the government.