Institutes expect an economic slump of up to eight percent

Gas storage facility in Kiel

If the gas were to run out, the consequences would be significant.

(Photo: dpa)

Berlin Germany must continue to face the danger that the gas runs out in winter. This is the result of the leading economic research institutes in their joint diagnosis for the Federal Ministry of Economics, which was presented on Thursday.

The economic researchers have calculated almost 1,500 different scenarios and played through different developments in savings, gas imports, transmissions, electricity production and weather conditions.

The basic statement is initially reassuring: there will probably not be a gas shortage in Germany in winter. Most of the scenarios lead to the result that the gas is enough. But the economists at the Essen RWI, the Kiel IfW, the Munich Ifo and the Halle IWH have also found several constellations in which the gas would not be enough.

It mainly depends on the weather. For almost all scenarios based on a very cold winter, there would be gas shortages and industry rationing. That could only be prevented if gas consumption across Germany was reduced by 20 percent, if Germany did not benefit from surprising new gas import sources.

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That is also the aim of the Federal Network Agencybut private households in particular are moving even further away, as the head of the authorities, Klaus Müller, announced on Thursday.

Gas shortage not excluded

Even in a normal winter, a lack of gas cannot be ruled out. But that would only happen if there were no savings. However, this presupposes that the liquefied natural gas (LNG) terminals under construction go online as planned and that sufficient gas arrives there. In the event that the rest of 2022 and the next two years get very warm, a gas shortage could be avoided even without savings.

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In principle, the economic researchers recommend taking precautions and increasing the energy supply. “A gas shortage could be avoided by continuing to operate the nuclear power plants that are still in operation and by fully utilizing the planned LNG terminals.”

If the gas were to run out, the consequences would be significant. In their joint diagnosis, the economists estimate that a shortage could lead to a drastic recession. Overall economic output in Germany would then decline by 7.9 percent in the coming year and by 4.2 percent in 2024.

In the more likely case of no shortage, the researchers are forecasting a mild recession of 0.4 percent next year. In 2024, growth is expected again, with an increase of 1.9 percent on the agenda.

economic growth

The experts warn of a significant slowdown.

(Photo: dpa)

However, this development is anything but positive, especially in view of the fact that the joint forecast in the spring for 2023 still assumed an increase of 3.1 percent.
“The high energy and food prices, which are likely to continue to rise in the coming year, will result in a significant loss of purchasing power,” said RWI Economic Director Torsten Schmidt. “Both low-income households and companies are therefore dependent on further political support.”

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However, the companies should not be given permanent subsidies. Inflation will then climb from 8.4 percent on average in 2022 to 8.8 percent next year and will only fall again to 2.2 percent in 2024.

More: Comment: The recession is coming – we need a debate about the German business model

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