Germany would be threatened with a deep recession if Russian gas imports were to suddenly stop. It is not the government that says so, but five economic institutes in Berlin.
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A sudden interruption of Russian gas purchases would cause economic growth across the Rhine to fall to 1.9% this year and the situation would be worse in 2023 with a contraction, a decline, of GDP (national wealth) of 2.2%. The recession, the word is out. Concretely: the cumulative loss of national wealth over 2022 and 2023 would be approximately 220 billion euros, or nearly 7% of annual wealth production.
The effects will depend on the duration and intensity of the war. Contrary to economic institutes, the German Ministry of the Economy tempers, as if to ward off bad luck. The government explains that inflation and uncertainty linked to Russia’s invasion of Ukraine will weigh on household consumption in the coming months. Berlin, which before the war bought more than half of its gas from Russia, has already reduced this share to 40%. Other solutions must therefore be found. To understand how serious the challenge promises to be: chemical giant BASF says it will have to stop production in Germany if Russian gas supplies are suddenly cut off.
The question of the consequences for the partner countries arises insofar as Germany is presented as the economic engine of Europe. So what would happen if this engine were to slow down or even stall? We are not there yet, but economic institutes are alerting us. And it comes as a Russian gas embargo is the subject of heated talks between member states of the European Union. Berlin being one of the main opponents of an immediate halt to purchases, waving the red flag of a violent drop in growth is certainly not trivial.