IMF says Russian gas embargo could heavily impact central Europe | Russia-Ukraine war News


A Russian gasoline embargo would trigger deep recessions in Hungary, Slovakia, the Czech Republic and Italy, the IMF says.

A Russian pure gasoline embargo would trigger deep recessions in Hungary, Slovakia, the Czech Republic and Italy until international locations can cooperate extra to share different provides, the Worldwide Financial Fund (IMF) has warned.

IMF researchers mentioned in a weblog posting on Tuesday that some international locations may face shortages of as a lot as 40 p.c of their regular gasoline consumption within the occasion of a complete cut-off of Russian gasoline.

Hungary would endure essentially the most economically from such an embargo, with a discount of greater than 6 p.c in gross home product (GDP), whereas Slovakia, the Czech Republic and Italy may see GDP shrink by 5 p.c if alternate gasoline provides, together with these of liquefied pure gasoline (LNG), are impeded from flowing freely to the place they’re wanted.

Beneath the extra optimistic situation of a completely built-in market, the financial injury is diminished, with Hungary seeing a GDP discount of greater than 3 p.c, Slovakia and Italy struggling a GDP discount of greater than 2 p.c and the Czech Republic’s GDP shrinking lower than 2 p.c.

Germany’s GDP would shrink by the excessive 2 p.c vary below the extra dire situation and simply over 1 p.c below the extra optimistic situation, because of entry to different vitality sources and the power to decrease consumption.

However German financial exercise could possibly be diminished by 2.7 p.c in 2023, with greater wholesale gasoline costs pushing German inflation up by one other 2 share factors in 2022 and 2023.

The IMF researchers mentioned European infrastructure and international provide have coped to this point, with a 60 p.c drop in Russian gasoline deliveries since June 2021. Complete gasoline consumption within the first quarter, throughout which Russia launched its invasion of Ukraine, triggering Western financial sanctions, was down 9 p.c from a 12 months earlier, and different provides are being tapped, particularly LNG from international markets.

“Our work suggests {that a} discount of as much as 70 p.c in Russian gasoline could possibly be managed within the brief time period by accessing different provides and vitality sources and given diminished demand from beforehand excessive costs,” the researchers mentioned.

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