RE: Europe nears Russian Gas Shutdown20 Jul 2022 08:00
“ ITALY and Hungary will suffer a 6pc tumble in GDP if Europe’s gas supply is suddenly shut off, the International Monetary Fund predicted as it warned of deep recessions ahead of a crunch deadline for the Nord Stream 1 pipeline.
Parts of central Europe could suffer shortages of as much as 40pc of gas consumption, dealing a “serious setback” to the region’s economy, according to the IMF. In the worst impacted countries, GDP could fall by 6pc if physical constraints stop gas getting to where it is needed, dealing a near €100bn (£85bn) blow to Italy’s economy. Hungary, Germany and Austria are also expected to be heavily affected.
The warning comes ahead of tomorrow’s restart of the Nord Stream 1 pipeline delivering gas to Germany from Russia after scheduled maintenance.
The European Commission admitted yesterday they do not expect the pipeline to be turned back on, potentially plunging Europe into an energy crisis.
The IMF’s economists warned that governments “lack a blueprint” to limit the damage done from the Kremlin cutting off supplies with swathes of Central and Eastern Europe still highly dependent on Russian gas.
The IMF said: “If physical constraints impede gas flows, the fragmented market approach suggests that the negative impact on economic output would be especially significant, as much as 6pc for some countries in Central and Eastern Europe where the intensity of Russian gas use is high and alternative supplies are scarce.”
It said a 70pc reduction in Russia gas supply “could be managed” but warned that finding alternative sources would be “much harder in a total shut-off”.
Hungary, Slovakia and the Czech Republic would be worst affected while Italy would also “face significant impacts due to its high reliance on gas in electricity production”.
Germany – which is heavily dependent on Russian gas – could suffer a hit of near 3pc, the IMF’s analysis suggests.
European countries are scrambling to find alternative sources of energy, such as importing liquefied natural gas, and plan to ration gas if the supply is cut off. The Russian state giant Gazprom declared force majeure on some European gas buyers on Monday in a sign that the Kremlin could tighten its squeeze on supplies.
Brussels is expected to unveil a plan to reduce gas demand and impact of supply cuts today.”
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