German economy would shrink by 2% in case of embargo on Russian energy – economists

Leading German economic institutes have said an immediate embargo on Russian fossil fuel supplies would lead to a 2.2 percent fall in GDP in 2023 – in line with other recent forecasts, which stand in contrast to the government’s warnings of stark consequences for the economy. The joint economic forecast by IfW, DIW, Ifo Institute, IWH and RWI Essen foresees a 1.9 percent GDP increase this year.

Still, the economic institutes warn of a possible economic downturn to come. “If gas supplies are stopped, the German economy is facing the threat of a sharp recession,” said Stefan Kooths, vice president of the Kiel Institute for the World Economy, the lead author on the report.

Due to the high level of uncertainty about gas supplies from Russia, which are important for the German economy, the institutes calculated two scenarios for economic development in their forecast. One assumes continued gas deliveries and no further economic escalations…

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