The German economy will be hit hard if gas supplies are cut off, German institutes have warned, according to CNN.
According to a joint economic estimate of five leading German economic research institutes, in the event of an immediate cessation of Russian gas supplies, the German economy would risk a loss of 220 billion euros in both 2022 and 2023. This would equate to more than 6 , 5% of Germany’s annual RES.
“If gas supplies are cut off, the German economy will plummet,” said Stefan Kooths, vice president and head of business research and development at the Kiel Institute for Global Economy.
The institutes downgraded GDP growth for 2022 to 2.75 from 4.8% due to the ongoing war in Ukraine and its economic impact while expecting inflation to reach 6.1% in 2022, the highest level in of the last 40 years. “In the event of a power outage, it would rise to a record 7.3% in post-war Germany,” the statement said.
It is recalled that in late March, Germany issued a warning about a possible shortage of gas due to the fact that Russia had stated that it would demand payments in rubles, urging all consumers to reduce the use of natural gas as much as possible.
“The process of recovery of the German economy is lagging behind again. The economic picture is shaped by opposing forces, all of which are leading to rising prices,” Kooths said.
The Joint Economic Forecast was prepared by the German Institute for Economic Research (DIW Berlin), the ifo Institute (Munich), the Kiel Institute for Global Economics (IfW), the Eale Institute for Economic Research in Halle (RW) and the IW RH (IW).
Source: Capital
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