A halt to Russian gas supplies to Germany would trigger a deep recession and cost half a million jobs, a senior economist said in an interview published on Tuesday, as Europe’s biggest economy tries to cut Russian energy imports.
Europe’s largest economy is heavily dependent upon Russia for energy, and nations banks echoed concerns over possible energy disruption expressed by big names in industry in recent days.
Christian Sewing, the chief executive of Deutsche Bank, said in his role as president of Germany’s BDB bank lobby that banks expected sharply slower growth this year of around 2% due to the war in Ukraine.
Research institutes advising the German government said last week that such a step would cost Europe’s largest economy some 220 billion-euro ($239 billion), the equivalent of 6.5% of annual output, over the next two years.
The Bundesbank calculates that losses amount to 165 billion euros this year and 115 billion euros in each of the following ones. Only the 2022 forecast includes rationing effects.
The central bank estimates that the worst damages will come from higher commodity costs. It said the findings of its two main models complement each other in the short term so that their findings can be added up to show the war’s full impact.
Germany, which is highly dependent on Russian gas for its energy needs, has so far resisted calls for a European boycott in response to the conflict in Ukraine.
A sudden stop in Russian energy supplies – an adverse scenario and not the institutes’ baseline expectation – would slow economic growth to 1.9% this year and result in a contraction of 2.2% in 2023, the institutes said.
The impact of a boycott would “not be overcome” over the next two years, the economic institutes – the RWI in Essen, the DIW in Berlin, the Ifo in Munich, the IfW in Kiel and Halle’s IWH – said in a joint statement.
Europe’s largest economy could yet suffer a “setback” at the end of 2023 into 2024, as demand for energy rises in the European winter, before “gradually” returning to growth.
The chairpersons of three German parliamentarian committees called on Tuesday for the European Union to impose an embargo on Russian oil as soon as possible. But a survey published on Wednesday showed most Germans balk at that idea.
But Germany is heavily reliant on Russian gas, which accounted for 55% of Germany’s gas imports in 2021 and 40% of its gas imports in the first quarter of 2022, Reuters reported.
There are conflicting views within the German establishment about a Russian energy ban right now.
German defense minister Christine Lambrecht said on Sunday that the European Union must discuss banning the import of Russian gas, Reuters reported.
Meanwhile, economy minister Robert Habeck said on Monday he opposes an immediate ban on Russian fossil fuel imports, per Reuters. Germany will wean itself off Russian gas by 2024, Habeck said in a March 25 press release.
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