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EU economy plunges into recession if Russia interrupts gas

2022-07-19 17:31:42Biznes SHKRUAR NGA REDAKSIA VOX

EU economy plunges into recession if Russia interrupts gas

Russian gas blackout would bring Europe into recession if nations worldwide fail to bring their diminishing supplies together, IMF says

A complete ban on Russian gas supplies to Europe would stok recessions across the continent if union countries do not join to share sources of limegas, the International Monetary Fund warned on Tuesday.

In addition to stocking up on shrinking supplies, avoiding major recessions would also require European countries to impose artificial price restrictions, IMF economists said in a post on the fund's official website.

Approximately 42 percent of European gas imports come from Russia and a disruption would cause economic contractions of more than 5 percent over the next year for the Czech Republic, Hungary, Slovakia and Italy, the IMF said. Under a better scenario, the EU economy will shrink by 0.4 percent, but shrink by more than 2 percent in a worst-case scenario.

Plus, supply chain barriers and gathering by individual European nations could worsen any gas shortages and result in an even worse energy crisis.

Russia has already halted gas flows into Germany through the Nord Stream 1 pipeline during its annual maintenance period, which is supposed to end on Thursday. But EU leaders are not expecting a reboot this week, the Wall Street Journal reported.

European leaders have blamed Moscow for using energy as a weapon since the start of the war in Ukraine in February. Moscow has denied the allegations.

The IMF's warning comes after its director, Kristalina Georgieva, wrote in a blog post last week that the lender plans to lower its global economic growth forecast for later in July. It cited the ongoing war in Ukraine, 41-year high inflation and echoes from the COVID-19 standoffs in China.

"It's going to be a tough 2022 - and maybe a tougher 2023, with added risk of recession," she said.


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