A possible halt to Russian energy imports could cost Germany up to 3% of GDP in the short term, according to simulation-based EconPol Europe estimates.
“The cost of cutting off energy imports would be significant, as the coronavirus pandemic cost about 4.5 percent of economic output,” said Andreas Peichl, head of the Ifo Center for Macroeconomics and Surveys.
He added that major economic downturns and upheavals could not be ruled out, as the strength of the possible shock includes great uncertainty in the estimates.
In addition, he said, it must be borne in mind that large parts of the industry have not yet recovered from the effects of the pandemic.
Oil and coal will be replaced by imports from other countries, but with gas it will not be so easy, they say.
“Germany must reduce its dependence on Russian gas immediately and decisively,” said Karen Pittel, head of the Ifo Center for Energy and Resources.
First and foremost, he said, the measures should aim to increase incentives to replace and save fossil fuels as quickly as possible, even if an embargo is not imminent.
Source: Capital
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