How a Russian Natural Gas Cutoff Could Weigh on Europe’s Economies

The partial shutoff of gas deliveries is already affecting European growth, and a full shutdown could be substantially more severe.

 
Russia’s invasion of Ukraine has further darkened the global growth outlook, with the European economy facing a serious setback given trade, investment, and financial links with the warring countries. Now, Europe is enduring a partial cutoff of natural gas exports from Russia, its largest energy supplier.

The prospect of an unprecedented total shutoff is fueling concern about gas shortages, still higher prices, and economic impacts. While policymakers are moving swiftly, they lack a blueprint to manage and minimize impact.

Three new IMF working papers examine these important issues. They examine how fragmented markets and delayed price pass-through can aggravate impacts, the role of the global liquefied natural gas market in moderating outcomes, and how such factors could play out in Germany, Europe’s largest economy.

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Πηγή: blogs.imf.org