In 2023, the gross domestic product of Europe’s largest economy would fall by 2.2% if gas deliveries stopped, according to the main German economic forecasting institutes.
Germany could end up in recession in 2023 if the supply of russian gas decided in the aftermath of the war in Ukrainethe major German economic forecasting institutes said on Wednesday.
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According to these six influential organizations (DIW, IFO, IfW, IWH and RWI), the Gross Domestic Product of Europe’s largest economy would fall by 2.2% by 2023 if the gas supply, on which Germany is particularly dependent, is cut. The cumulative GDP loss for 2022 and 2023 would be about 220 billion euros, they specify. †If the gas supply is cut off, the German economy risks a deep recession“Reacts Stefan Kooths, vice president of the IfW, in a press release.
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The GDP decline is expected to be 5% in the second quarter of 2023, before the economy recovers at the end of the year. A possible embargo on Russian gas is the subject of heated discussions among EU member states, with Berlin being one of the main opponents of an immediate cessation of imports, believing that economic and social peace in the country. The consequences of such a shutdown and Germany’s ability to find alternative energy sources in the short term are a matter of debate among economists.
Berlin multiplies the steps to find new suppliers
Berlin, which supplied more than 55% from Russia before the war, has already reduced this share to 40% and is stepping up its efforts to find other suppliers. Germany does not plan to run out of Russian gas before mid-2024 and activated the first level of its contingency plan at the end of March to guarantee the supply of natural gas in the face of the threat of a halt to Russian supplies. † The institutes generally note that the German economy “crosses difficult waters» at a time when lifting restrictions related to the pandemic could boost activity.
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The supply chainsare always on“while new restrictions mainly affect China, and the “shock waves“of the war in Ukraine”have a negative impact on the economy, both on the supply and demand sides“, they note. The fallout from the war in Ukraine is pushing these six institutions to lower their 2022 growth forecast, now projected at 2.7%, from an estimate of 4.8% in October. reflected in an expected inflation rate of 6.1% this year, and even 7.3% in the event of a cessation of gas supplies, ie “the highest value since the founding of the Federal RepublicIn 2023, the rate without deliveries would still be 5.0% and 2.8% with enforcement.
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