An abrupt halt in Russian natural gas deliveries could trigger a recession in Germany comparable to the economic crisis years of 2020 and 2009, if not worse, according to a study.
Such an embargo, whether triggered by the European Union or Russia, would lead to a drop in production in the first 12 months of between €114 billion and €286 billion, corresponding to around 3% to 8% of Gross Domestic Product (GDP), said the IMK institute.
Economist Tom Krebs’ study also said that economic output in Europe’s largest economy could fall 2-4% more as a result of falling demand due to high energy prices.
A sudden gas embargo could trigger a recession similar to that seen in the first year of the pandemic or the 2009 financial crisis, Krebs warned.
“It could also lead to an economic crisis that (West) Germany has not seen since World War II,” he said.
The University of Mannheim economist found that six German industries are particularly dependent on natural gas: chemicals, in particular basic chemicals; production and processing of metals, as well as foundry, glass and ceramics; foods; paper; mechanical engineering and vehicle manufacturing.
“For these industrial sectors, natural gas is an essential input in the production process and is difficult to replace,” said Krebs.
Source: CNN Brasil
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