Wednesday, April 17, 2024

EU could lose 3% of its GDP in case of ban on Russia’s gas: IMF

The IMF forecast says a ban on Russian gas and oil could cost the EU at least 3% of its GDP, depending on the conditions of winter. Kammer also noted that the EU countries must look for alternative suppliers and implement smaller measures to ensure a larger potential impact.

Further, he advised governments to run “public campaigns to reduce energy consumption” and increased storage. Speaking about Ukraine, Kammer said that while the economic growth has slowed sharply for Ukraine, it will “not detail” or lead to a Europe-wide recession.

The Russian war led to an influx of refugees to EU nations, leading to increased energy requirements. Poland is the most affected, with thousands of refugees who have entered its territory. Kammer, however, pointed out that if the refugees decide to stay in the neighbouring nations it will be a “bad situation” for Ukraine.

As the European Union is weighing the impact of the imposition of an embargo on Russian gas, International Monetary Fund (IMF) head of European Department, Alfred Kammer, flagged that Europe can get as far as six months without a regular supply of Russian energy imports. 

Some countries like Latvia, and Finland are 90% dependent on Russian energy as per data from 2020. If the EU sanctions Russian gas, it will imply a substantial hit to the economy.

The senior IMF official forecasted that beyond the time frame, European nations would have to bear a heavy economic impact in the absence of reliable and inexpensive alternative supplies. Kammer also suggested that the countries dependent on Russian gas in the region must ensure a series of steps to ease the blow if the EU bans Russian energy imports.

The IMF official advised that the countries must reduce consumption and increase inventory. He explained the problem is stemmed from the heavy reliance of European nations on Russian natural gas. Notably, the EU’s 43% natural gas is imported from Russia, making Moscow the largest supplier, by far. 

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