Sunday. 14.04.2024

A complete import ban on Russian energy could plunge the German economy into recession this year, according to model calculations by the German central bank.

"In a scenario where the crisis intensified, real gross domestic product would decline by just under 2% this year compared to 2021," the Bundesbank said in a monthly report published on Friday.

Gas supplies would be particularly hard to replace, leading to supply shortfalls. More than half of Germany's gas imports come from Russia.

The consequences of a supply stop would also burden the German economy over the next two years - but Europe's largest economy would not shrink as much as in 2020 at the peak of the coronavirus crisis, the bank said.

In 2020, the German economy shrank by 4.6%, last year it grew by 2.9%.

In the first quarter of the current year, the central bank expects economic output to stagnate.

Uncertainty

"All results are fraught with considerable uncertainty," the bank warned.

There were several other factors that would harm the economy the bank said in its summary of the monthly report: "An increase in commodity prices, which would indirectly erode household incomes, would weaken growth considerably. Moreover, foreign demand, and thus German exports, would decline significantly."

Heightened uncertainty was also expected to drag down business investment and private consumption.

Recession predicted in Germany if Russian energy imports stop