Russian energy embargo could hit German economy hard: Bundesbank


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.)

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and up-to-date with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor


About Author

Comments are closed.