A climb in the western sanctions or a complete rupture between Berlin and Moscow could provoke a global shock, according to Paul Gruenwaldchief economist at S&P Global, and a bloodletting in the German gross domestic product (GDP)according to the main Teutonic economic institutes.
The five most prominent institutes have cut their growth forecast for 2022 of the largest European economy to 2.7% from 4.8% in a base scenario, and forecast a growth for 2023 of 3.1%.
However, in the event of a sudden Russian power cut, the German economy would grow by 1.9% this year and it would contract by 2.2% in 2023.
The cumulative GDP loss in 2022 and 2023 in case of a supply freeze it will probably be about 220,000 million euros, which is equivalent to more than 6.5% of production annual economy, as calculated by these institutes and collected by Reuters.
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Background
The covid crisis, coupled with the consequences of the Russian invasion of Ukraine, leads leading experts to calculate a GDP growth of only 2.7% vs. 4.8% expected before the start of the war.
This has caused, especially in Germany, the abrupt interruption of the business of numerous companies that traded with Russia and many others that need components or raw materials from Putin’s country.
This data has been calculated jointly by the Kiel Institute (IfW), the ifo Institute, the DIW Institute, the Leibniz Institute for Economic Research in Halle as well as the Leibniz Institute in Essen.
The economic experts of the Government itself, however, presented a report a week ago in which they lowered the growth forecast even more, up to 1.8%.
