Russian invasion of Ukraine dashes upswing hopes for German economy, economy likely to shrink again in Q1

[beijingwalker]

Russian invasion of Ukraine dashes upswing hopes for German economy, economy likely to shrink again in Q1​

Reuters
Mar 03, 2022

BERLIN — Germany will have to forfeit an economic upswing in spring as Russia’s invasion of Ukraine, sanctions and high energy prices hurt companies and households, Economy Minister Robert Habeck said on Thursday, pledging state support to keep firms afloat.

“The consequences of the sanctions and war are noticeable and the situation remains tense,” Habeck said after talks with German business leaders, adding that hopes of a return to pre-pandemic levels of growth in the second quarter had been dashed.

“We had hoped that we would experience an upswing this spring, a recovery phase. But now we have the consequences of the war,” he said, adding that state bank KfW would extend loans to German businesses affected by sanctions on Russia.

Habeck did not say how much liquidity KfW would provide.

Russia’s invasion of Ukraine entered its second week on Thursday with Ukrainian cities surrounded and under bombardment.

Habeck said he hoped measures taken by the German government to alleviate the impact of sweeping economic sanctions on Russia and high global energy prices on businesses and households would avert a recession in Europe’s largest economy.

Habeck said he was opposed to calls by Germany’s partners to ban Russian energy imports, saying that Russian gas and oil were needed at least in the short-term as Germany works on diversifying supplies to make itself less dependent on Russia.

“We will keep open the possibility of energy imports from Russia” to ensure that electricity prices remain relatively stable, he added.

The crisis in Ukraine has forced Germany to announce a national gas reserve, plans for LNG terminals as well as possibly extending the lifespan of coal-fired plants as it seeks to reduce its heavy reliance on Russian energy.

Russian invasion of Ukraine dashes upswing hopes for German economy

BERLIN — Germany will have to forfeit an economic upswing in spring as Russia’s invasion of Ukraine, sanctions and high energy prices hurt companies and households,…

financialpost.com

German economy likely to shrink again in Q1: Bundesbank

The German economy will probably shrink again in the current quarter as a new wave of coronavirus infections stops many people from going to work, the Bundesbank said on Monday, while predicting a rebound in the spring.

www.reuters.com

 

[beijingwalker]

Economic pain on way for Europe​

in World Economy News 04/03/2022

Europe’s economy may bear the brunt of the spillover effects of the Ukraine crisis in the form of even higher energy prices and reduced business confidence, analysts said.

Tian Dewen, deputy director of the Institute of European Studies at the Chinese Academy of Social Sciences, said that the world is a global village in which countries are economically interdependent, and any crisis that arises can affect the lives of people everywhere.

One immediate impact of the Ukraine crisis is the hit to Europe’s economic recovery against the backdrop of the COVID-19 pandemic.

“The impact of a conflict or exchange of fire between Russia and Ukraine is bound to ripple across Europe and beyond, with knock-on effects on the global economy,” Tian said. Russia is the world’s third-largest oil producer and one of the world’s leading exporters of natural gas, while Ukraine is the world’s leading food exporter.

Philip Lane, the European Central Bank’s chief economist, has told fellow policymakers that the Ukraine conflict may reduce the eurozone’s gross domestic product by 0.3 percent to 0.4 percent this year, according to a Reuters report.

Russia accounts for about 40 percent of imports of natural gas to the European Union and about 30 percent of its crude imports, according to Eurostat, the bloc’s statistics agency.

The EU and the United States have imposed sanctions on Russia’s biggest banks and its elites, and have frozen the assets of the central bank held outside the country. They have also acted to remove some Russian banks from SWIFT, the payment system used for most international financial transactions.

Tian said energy issues will directly affect European countries, given the reliance of many of them on Russian supplies. Ukraine is a key transit hub for Russian oil and gas. Austria, Italy, and Slovakia import natural gas from Russia, mainly transported through Ukraine. Some Russian-supplied natural gas also reaches Germany and Poland via Ukraine.

Energy prices have been soaring over the past year in Europe, and the Ukraine crisis will make the situation worse, Tian said.

“For many countries, alternative energy solutions are hard to come by in the short term,” he said.

Tian said that a characteristic of the EU economy is that, for the most part, its raw materials are supplied from outside the bloc, and local capital-intensive and technology-intensive enterprises are concentrated. Additionally, its own markets lack growth momentum, and many of the region’s goods need to be sold outside Europe.

“That is why uncertainty in the world economy will have a greater impact on the EU economy,” Tian said. “Soaring energy and raw material prices and supply shortages, as well as global supply chains that have not fully recovered from the COVID-19 pandemic, are all negative factors for the recovery of the European economy.”

Business confidence
Tian said that investors and capital typically steer clear of exposure to conflicts, and the uncertainty will hurt business confidence and consumption. This would have a big impact on the European economy, the scholar added.

Chen Fengying, a senior researcher on the world economy at the China Institutes of Contemporary International Relations, said that considering the EU’s reliance on Russian energy, there are indications that Western countries may not touch the energy sector in their actions against Moscow.

But the Russia-Ukraine conflict will further stoke inflation in Europe. Aside from energy bills, food prices look set to jump, Chen added.

Russia and Ukraine together account for 25 to 30 percent of global wheat exports, and around 80 percent of global shipments of sunflower seeds, according to the London consultancy Capital Economics.

Chen said that many countries are already paying higher prices because of the conflict. Within the EU, Germany is likely to suffer the most. Its economy is growing slower than many other EU countries.

Germany is sticking to a plan to abandon nuclear energy by this year and has been reliant on Russian energy.

But the country announced on Feb 22 that it would suspend the certification of the Nord Stream 2 gas pipeline, which is worth about $11 billion.

Chen said that if the Ukraine conflict eases soon, there are grounds for optimism that its economic effects will gradually diminish.

Economic pain on way for Europe | Hellenic Shipping News Worldwide

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[beijingwalker]

German govt advisers slash GDP outlook, see recession risk​

Reuters
March 30, 2022

BERLIN, March 30 (Reuters) - The German government's council of economic advisers more than halved its growth forecast for Europe's largest economy on Wednesday and flagged a "substantial" recession risk as a result of Russia's invasion of Ukraine.

The advisers, whose forecasts guide the German government in setting fiscal policy, cut their 2022 economic growth forecast to 1.8% from 4.6%, adding output would not reach its pre-pandemic level before the third quarter of the year.

In 2023, Germany's gross domestic product should grow by 3.6%, the four advisers said.

"We haven't tried to calculate the exact probability of a recession," council member Volker Wieland told a news conference.

"For example, we don't know if there will be a supply freeze or whether the West can no longer avoid imposing an energy embargo. But these are possibilities. So, the risk is substantial," Wieland said.

He added that unlike the U.S. economy, Germany still had not fully recovered from the coronavirus pandemic.

The advisers said Germany was on track for further economic recovery before Russia invaded its neighbour on Feb. 24.

"The Russian war of aggression against Ukraine has now drastically worsened economic conditions," they said in a statement.

The war further frayed supply chains that had already been strained due to the COVID-19 pandemic, and a surge in natural gas and crude oil prices hurt companies and private consumption, they said.

The council forecast inflation to reach 6.1% in 2022 before easing to 3.4% next year.

A potential escalation of the conflict and additional sanctions could have a significantly greater impact on the German and European economies, the experts warned.

"We have to change course and use all levers to become less dependent on Russian raw material supplies," Wieland told Reuters, adding he favoured extending the life of German nuclear power plants.

The country's three remaining nuclear power plants are scheduled to be shut down by the end of the year, and the government has so far vehemently opposed extending their life-span as a way of reducing its reliance on Russian gas.

German govt advisers slash GDP outlook, see recession risk

The German government's council of economic advisers more than halved its growth forecast for Europe's largest economy on Wednesday and flagged a "substantial" recession risk as a result of Russia's invasion of Ukraine.

www.reuters.com

 

[Viet]

Putting the temporar negative effect aside

the great side is we will see probably one million Ukraine refugees will settle down here in Germany.

a welcome population growth

 

[Apollon]

Putting the temporar negative effect aside

the great side is we will see probably one million Ukraine refugees will settle down here in Germany.

a welcome population growth

And those are european, hard working and highly educated.

 

[Viet]

And those are european, hard working and highly educated.

Yes
The more Ukrainers coming the better
Germany shrinks if not doing something about it.

 

[Indos]

The slow down is not related to energy ban since German and EU dont ban Russian energy. It is more of the effect on increasing price of energy commodities and other commodities.

 

[BHAN85]

Who give a sht

European elite keep buying all they want, meanwhile Russian elite suffers.

The new scenario only hurt European common people.

 

[Georg]

Putting the temporar negative effect aside

the great side is we will see probably one million Ukraine refugees will settle down here in Germany.

a welcome population growth

other than the refugees from muslim countrys, which are mostly pussy men in fighting age who run away from danger leaving their wifes and kids behind, the people from Ukraine are mostly women with kids and eldery making no trouble and be thankful for shelter and secure... sharing very similar culture and ideas