An immediate end to Russian energy imports would send Germany into “sharp recession” next year, the country’s leading economic institutes said in a forecast published today.
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 war in Ukraine.
Closing the taps in “mid-April” this year would limit growth to 1.9 per cent in 2022 and push Germany into a recession in 2023, causing the economy to shrink by 2.2 per cent, according to the forecast.
The impact of a boycott would “not be overcome” over the next two years, the institutes (DIW, Ifo, IfW Kiel, IWH and RWI) 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.
Even without a boycott of Russian gas, the war in Ukraine is “slowing down” Germany’s recovery from the economic shock of the coronavirus pandemic, the institutes said.
The group slashed its forecast for growth in 2022 to 2.7 per cent, from its previous estimate of 4.8 per cent made in October last year.
At the same time, it raised its 2023 growth forecast to 3.1 per cent from 1.9 per cent, in a scenario where energy deliveries continue.
Before Moscow began its war in Ukraine, a third of Germany’s oil imports, 45 per cent of its coal purchases and 55 per cent of gas imports came from Russia.
The country has set about weaning itself off Russia energy imports, accelerating investments in renewables and building liquefied natural gas (LNG) gas terminals to diversify its supplies.
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