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Bundesbank Warns Of “Severe Crisis Scenario” Upon Russian Gas Embargo

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European Union officials are considering an all-out embargo on Russian natural gas imports, which could be presented to Brussels for review in the near term. Warnings about such a ban have sparked concern among Germany’s top bank, which indicated in a new monthly bulletin published Friday that an immediate, full-blown ban on Russian gas imports could exacerbate the threat of stagflation and lead to a devastating recession, according to FT

Bundesbank, Germany’s central bank, warned that an embargo on Russian gas would cost its economy a staggering €180 billion in lost output this year as the price of energy products would soar to unimaginable levels and shock the economy into one of the deepest downturns in years. 

“In the severe crisis scenario, real GDP in the current year would fall by almost 2% compared to 2021.

“In addition, the inflation rate would be significantly higher for a longer period of time.” the Bundesbank said.

The German central bank noted the European Union’s economic recovery was already faltering from the fallout of Russia’s invasion of Ukraine. An exogenous shock could trigger a recession. ..

To read more visit Zero Hedge.

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