Germany could lose $240 billion in annual output if Russian power is cut

  • Germany is under increasing pressure to ban Russian energy imports during the war in Ukraine.
  • An immediate ban on Russian energy would send Germany into “a deep recession”, according to a report by economic institutions advising Berlin.
  • Germany could lose $240 billion, or 6.5% of its annual economic output, over two years if Russian gas is shut down.

Germany could lose 220 billion euros ($240 billion) in economic output over the next two years if Russian gas is stopped immediately. That’s according to a joint economic forecast, called the Gemeinschaftsdiagnose report, released by economic institutions advising Berlin on Wednesday.

Europe’s largest economy is under increasing pressure to ban Russian energy imports amid reports of Russian atrocities in Ukraine. But Germany is heavily dependent on Russian gas, which accounted for 55% of Germany’s gas imports in 2021 and 40% of its gas imports in the first quarter of 2022, Reuters reported.

An immediate embargo on Russian oil and gas supplies would plunge Germany into


recession

with a 6.5% drop in its annual economic output, according to the Gemeinschaftsdiagnose report.

“The decision to become independent of Russian raw material supplies is likely to remain valid even when the military and political situation calms down again,” the report said, according to a translation by Bloomberg. “That means some of the energy supply and energy-intensive industry has to realign.”

Germany also faces the risk of gas supply disruptions initiated by Russia, with President Vladimir Putin signing a decree last month requiring countries importing Russian gas to pay in roubles. He threatened to void existing contracts of those who failed to comply, Reuters reported.

In response, Germany activated an energy emergency plan. The country is now in the “early warning phase” of the plan, with Berlin calling on all energy consumers – both industry and households – to save energy and reduce consumption. If the situation worsens, Europe’s manufacturing powerhouse could ration gas in the latest of the three-stage plan, with industry first in line for power cuts, as Germany’s Ministry of Health has pointed out. economy. This decision could devastate the economy and lead to job losses.

Due to the war in Ukraine, German banks expected the country’s GDP growth to slow to 2% in 2022 from 2.7% in 2021, Reuters reported last week, citing the CEO of Deutsche Bank , Christian Sewing, who was speaking as the President of Germany. BDB bank lobby.

Germany will wean itself off Russian gas by 2024, German Economy Minister Robert Habeck said in a March 25 press release.

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