Leading German economists have warned of an increased risk of recession that the German economy could face if it refuses to supply energy from Russia.
As Fritzi Köhler-Gabe, chief economist at KfW Bank, noted on NTV on May 1, the German economy was supposed to grow in 2022, but given “serious negative risks, everything could turn out differently.”
In her opinion, the imposition of an embargo on the supply of Russian energy resources could lead to further price increases, a fall in wages and negative dynamics in the labor market.
She also clarified that other factors are also affecting the economy: disruptions in supply chains caused by problems in China, coronavirus restrictions, a shortage of qualified workers and skyrocketing prices due to the situation in Ukraine.
In addition, economic expert Veronica Grimm also predicted “bad weather” for the German economy. She believes that energy prices will remain high and real wages will decline due to persistently high inflation.
“Rising energy prices led to record inflation in March and reduced purchasing power,” Grimm said.
Earlier, on April 30, German Finance Minister Christian Lindner said that the country would not pay for Russian gas in rubles, even in the long term. The head of the German Finance Ministry also added that Germany is doing everything possible to become independent of Russian gas and Russia as soon as possible.
Prior to this, on April 27, Deutsche Wirtschafts Nachrichten reported that the euro had significantly lost ground over the past five years, and the tightening of sanctions against Russia would only aggravate the situation.
The expert noted that a recession, high inflation and the inaction of the European Central Bank will be (ECB) “the worst scenario.” The euro will not benefit from three interest rate hikes in 2022, as planned by the ECB, he said.
On April 25, Igor Yushkov, a leading analyst at the National Energy Security Fund, said that Germany is more dependent on Russian gas than other countries in the European Union.
Prior to that, on April 22, it became known that the Russian gas embargo would cost Germany €180 billion.
On the same day, German Chancellor Olaf Scholz said that a sudden embargo on Russian gas, if introduced by Germany, would not bring quick peace in Ukraine. He also clarified that it is also important for Germany itself to avoid a serious economic crisis.
