Russian gas embargo would cost Germany dearly, Bundesbank warns

An immediate European embargo on Russian gas could cost Germany, heavily dependent on this resource, up to 5% of its GDP this year, according to an estimate published by the German central bank on Friday.

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“Germany’s real GDP could be up to 5% lower than forecast” in the event of a voluntary or sudden stoppage of Russian gas imports, the Bundesbank detailed in its April monthly economic report.

This would amount to a shortfall of “180 billion euros” for national production, she added.

In such a scenario, the German economy could register in a recession of 2% this year, estimates the study.

Inflation, already galloping in the country, could gain “1.5 points in 2022”, and “2 points in 2023”, compared to a scenario without an embargo, according to the institution.

An embargo on Russian gas has been the subject of bitter discussions between EU member states, since the invasion at the end of February of Ukraine by Moscow, which derives most of its resources from hydrocarbon sales.

The German government of Olaf Scholz is one of the main opponents of an immediate halt to imports, believing that it is about economic and social peace in the country, with consequences for other EU economies.

This refusal arouses the irritation of kyiv and several European governments.

Germany, and particularly its industry, is particularly dependent on this resource, which represented, before the conflict, 55% of its total gas imports.

“I don’t see how a gas embargo can put an end to the war at all,” German Chancellor Olaf Scholz repeated on Friday in an interview with the weekly Der Spiegel.

“We want to avoid a dramatic economic crisis, the loss of millions of jobs and factories that would never open again,” he added.

Germany has however already reduced its Russian imports, in the first quarter of 2022, to 40% of the total, by multiplying the steps to find other suppliers, such as Qatar or the United States.

The country has also recently released an envelope of three billion euros to equip itself with large floating terminals of liquefied natural gas (LNG), which it does not have at the moment.

However, Germany does not envisage being able to do without Russian gas before mid-2024, according to the government.


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