Losing Russian energy would weigh on Europe’s economy: IMF official
Europe can get by without Russian gas for six months, but beyond that, the economic impact would be severe, a senior IMF official told AFP.
Alfred Kammer, head of the IMF’s European Department, urged countries in the region to take a series of steps to ease the blow, including reducing consumption to build up inventory.
The region relies on Russia for the vast majority of its energy needs, especially natural gas, and IMF economists looked at the economic cost of losing Moscow’s supply.
“Over the first six months, Europe can deal with such a shut off by having alternative supplies and using existing storage,” he said in an interview on the sidelines of the spring meetings of the IMF and World Bank.
“However, if that gas shut off were to last into the winter, and over a longer period, then that would have significant effects” on the European economy, he said.
Western countries have considered putting an embargo on Russian energy in retaliation for its invasion of Ukraine, while Moscow could also shut off exports to hit back at the damaging sanctions already imposed on the government.
The International Monetary Fund projects that a total loss of Russian gas and oil supplies could cost the European Union 3 percent of GDP, depending on the severity of the winter.
He called for steps to prepare for the possibility.
“There is no single option, which has a large impact, but lots of smaller measures will have a larger impact,” he said, including by finding alternative suppliers, which some countries already have begun to do.
The Kremlin launched some drastic measures to protect the economy. Those included hiking interest rates to as high as 20 percent, instituting capital controls and forcing Russian business to convert their profits into rubles.
As a result, the value of the ruble has recovered after an initial plunge, and the central bank reversed part of its interest rate increase.
Rosstat, the state’s economic statistics agency, said inflation last month hit 17.3 percent, the highest level since 2002.
U.S. officials point to the closing of Lada auto plants - a brand made by the Russian company Avtovaz and majority-owned by French automaker Renault - as a sign of sanctions having an effect.
Moscow’s mayor says the city is looking at 200,000 job losses from foreign companies shutting down operations. More than 300 companies hav