Russian gas shutdown would send some EU countries into recession:

In the midst of speculation that Russian President Vladimir Putin will keep the Nord Stream 1 pipe closed when routine annual maintenance ends this weekend, IMF said Europe did not have a comprehensive plan to overcome deficiencies, further increases in energy prices and impact on growth, The Guardian was reported.

Funds based in Washington identified Hungary, Slovakia and the Czech Republic as three European Union countries that were most likely suffering, but said that Italy, Germany and Austria would also suffer significant effects, the report said.

“The total unprecedented prospect of closure is triggering concerns about gas shortages, higher prices, and economic impacts. While policy makers move quickly, they do not have a blueprint to manage and minimize impacts,” said IMF officials.”Our work shows that in some of the most affected countries in Central and Eastern Europe, there is a risk of deficiency as much as 40 percent of gas consumption and gross domestic product shrinks up to 6 percent.

“The impact, however, can be reduced by securing alternative supplies and energy sources, facilitating infrastructure bottlenecks, encouraging energy savings while protecting vulnerable households, and expanding solidarity agreements to share gas throughout the country.”

The IMF said European energy infrastructure and global supply have so far overcome a decline in 60 percent in the delivery of Russian gas since June last year, but underlined the potential cost if the Kremlin responded to Western sanctions with the energy supply of “armed”, The Guardian reported.

The Russian invasion of Ukraine has led funds to cut its growth estimates for the global economy to 3.6 percent this year, and will announce a decline in further rankings later this month. 

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Elara Gill

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