Recession on the doors
The German economy is about to go into recession if Russia-Ukraine continues. The country is expected to shrink at 2% if the Russia-Ukraine war does not stop. The recession would be because of the ban on Russian coal, oil, and gas which will restrict the power industry of Germany. Economists are trying to analyze the economic fall of Germany if the sanctions on Russia continue and there is a shortage of power resources in Germany because of the sanctions. Research institutes advising Germany said that there would be a loss of 220 billion-euros equal to 6.7% output decrease annually if the war continues and trade between Germany and Russia is restricted. The embargo on fossil fuels and surge on crude will increase the prices of coal and gas. The Bundesbank has said that any fluctuations in the financial market due to the war are not included in assessing the recession and the economic crisis can be stronger than what is expected if the war intensifies. The German central bank predicts that output will be 1.75% lower this year and inflation would be 1.5% higher this year. The economy of Germany is in the hands of the Russia-Ukraine war and the downfall percentage of the German economy heavily depends on the intensity of the war.
I agree with what you said that the ongoing war is affecting many economies, but it is too soon to conclude that a big economy like Germany will go into recession because of the war. The power shortage for german industry will surely disturb the production in power industry and increase price, but it won't be the ultimate reason for recession.
ReplyDeleteI wonder if Germany will restructure how it gets it oil, gas, coal, etc in the future because of it's harmful ties to Russia. The current issues Germany is facing is because of it's trade with a non-allied country, so I wonder if they will turn to other allied countries for these goods in the future to avoid this problem again.
ReplyDeleteI think if this war continues into the foreseeable future, then many European countries are going to start having to look for fuel/oil from countries other than Russia. I don't think that Germany will enter a recession just because of the the Ukraine crisis, but the crisis will most likely keep inflation rising in the country, which could lead to some problems for the citizens of the country.
ReplyDeleteI'd be curious if we see increased European efforts to focus on nuclear and other forms of green energy. While it's still possible to get oil and natural gas from other countries, the cost is higher than receiving it directly from Russia. What we also have to remember that, even though Germany is hurting, the economic outlook for Russia is even grimmer from the sanctions applied to its economy.
ReplyDelete