Russian energy embargo could hit German economy hard: Bundesbank

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If Germany joins an energy embargo against Russia, its economy could be significantly weakened, according to a monthly report by Germany’s central bank Deutsche Bundesbank.

In a scenario of an intensification of the crisis, Germany’s real gross domestic product (GDP) would decline by just under 2% in the current year compared to 2021, according to the report, which analyzes the possible macroeconomic consequences of an escalation of the Russian-Ukrainian conflict. , reported the Xinhua news agency.



In this case, Germany’s real GDP could, in the near term, be up to 5% lower than the European Central Bank’s (ECB) March forecast, according to the report.

Inflation would “rise again significantly,” the report notes.

Germany’s inflation rate could be 1.5 percentage points higher in 2022 and two percentage points higher in 2023 than ECB estimates.

According to the bank, the main reason is a “significant increase in energy prices in the event of a further escalation”. However, all results are “full of considerable uncertainties” due to the complex nature of the conflict.

Germany’s inflation rate hit 7.3% in March, hitting a 40-year high, according to the Federal Statistical Office (Destatis). Household energy and motor fuel prices rose 39.5% year-on-year.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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