A new study by a government adviser forecasts the German economy shrinking by up to 12% if Russian natural gas imports are halted instantly, which is comparable to the 2009 financial crisis and the 2020 COVID-19 pandemic, media reported
MOSCOW (Pakistan Point News / Sputnik - 10th May, 2022) A new study by a government adviser forecasts the German economy shrinking by up to 12% if Russian natural gas imports are halted instantly, which is comparable to the 2009 financial crisis and the 2020 COVID-19 pandemic, media reported.
On Tuesday, German Foreign Minister Annalena Baerbock said that Berlin will reduce its dependence on Russian energy resources to "zero," adding that the decision could never be reversed.
According to Financial Times, Tom Krebs, an economics professor at the University of Mannheim and adviser to the country's finance ministry, undertook a special study on the issue and presented two scenarios on how strongly the impact of such a measure will be felt.
Under the first scenario, Germany may suffer a loss of 3.2% to 8% of its GDP due to a drop in production, while a lower demand due to rising prices may eliminate another 2% to 4%. Thus, an overall loss could vary from 5.2% to 12%.
The second scenario paints a somewhat more optimistic picture, with the damage to production ranging between 1.2% to 3%. Thus, a total loss is predicted to be from 3.2% to 7% when a slump in demand is factored in.
On February 24, Russia launched a military operation in Ukraine after the breakaway republics of Donetsk and Luhansk appealed for help in defending themselves against Ukrainian forces. In response, the European Union has announced its intention to reduce dependence on Russian energy supplies in the foreseeable future.
