Russian gas shutoff would send some EU countries into recession, IMF warns
A total shutdown of Russian gas supply would reduce GDP in the most vulnerable EU countries by as much as 6% and send them plunging into recession, the International Monetary Fund has warned.
Amid speculation that the Russian president, Vladimir Putin, will keep theNord Stream 1 pipeline closed when routine annual maintenance ends later this week, the IMF said Europe lacked a comprehensive plan to cope with shortages, further increases in energy prices and the impact on growth.
The Washington-based fund identified Hungary, Slovakia and the Czech Republic as the three EU countries likely to suffer most, but said Italy, Germany and Austria would also suffer significant effects.
“The prospect of an unprecedented total shutoff is fuelling concern about gas shortages, still higher prices, and economic impacts. While policymakers are moving swiftly, they lack a blueprint to manage and minimise impact,” IMF officials said in a blogpost.
“Our work shows that in some of the most-affected countries in central and eastern Europe, there is a risk of shortages of as much as 40% of gas consumption and of gross domestic product shrinking by up to 6%.
“The impacts, however, could be mitigated by securing alternative supplies and energy sources, easing infrastructure bottlenecks, encouraging energy savings while protecting vulnerable households, and expanding solidarity agreements to share gas across countries.”
The IMF said Europe’s energy infrastructure and global supply had coped so far with a 60% drop in Russian gas deliveries since June last year, but underlined the potential costs should the Kremlin respond to western sanctions by “weaponising” energy supplies.
Russia’s invasion of Ukraine has already led the fund to cut its growth
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