The economic damage from the shutdown of Russian gas flows is piling up fast in Europe and risks eventually eclipsing the impact of the global financial crisis.
With a continent-wide recession now seemingly inevitable, a harsh winter is coming for chemical producers, steel plants and car manufacturers starved of essential raw materials who’ve joined households in sounding the alarm over rocketing energy bills. The suspected sabotage of Germany’s main pipeline for gas from Russia underlined that Europe will have to survive without any significant Russian flows.
Building on a model of the European energy market and economy, the Bloomberg Economics base case is now a 1% drop in gross domestic product, with the downturn starting in the fourth quarter. If the coming months turn especially icy and the 27 members of the European Union fail to efficiently share scarce fuel supplies, the contraction could be as much as 5%.
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The suspected sabotage of Germany’s main pipeline for gas from Russia underlined fears that Europe will have to survive without any significant Russian flows https://t.co/RZ8OCF0fdV
— Bloomberg (@business) September 27, 2022