On Wednesday, Russia wants to interrupt gas supplies at Nord Stream 1 again for maintenance work. Should the Russian gas be completely shut off, RWI boss Schmidt predicts double-digit inflation rates for Germany.
The President of the RWI-Leibniz Institute, Christoph Schmidt, assumes that Germany will plunge into recession if Russian gas supplies are stopped: “The world would not end without Russian gas, but life would become much harder,” said Schmidt of the Rheinische Post. “We would then be threatened with double-digit inflation rates and economic output would probably fall by three to four percent. In such a case, a real recession would probably have to be expected for Germany in 2023.” In its RWI forecast, the institute is still counting on growth of 2.7 percent.
On Wednesday, Russia wants to interrupt gas supplies at Nord Stream 1 again for maintenance work. Gazprom itself had stated that operations should be resumed at the previous level after the maintenance if there were no technical problems. Currently, the pipeline is only 20 percent utilized with a gas flow of 33 million cubic meters per day. Gazprom had also explained this with necessary maintenance work.
The RWI boss is already expecting long-lasting inflation: “In our RWI forecast from June, we still expected the inflation rate to fall to 2.6 percent in 2023. But that will probably not be sustainable,” he said Newspaper. “The issue of inflation will certainly keep us busy in 2024.”
The RWI President called on the European Central Bank (ECB) to raise interest rates sharply in September. “If citizens trust the ECB to fight inflation, it prevents a wage-price spiral,” he said. In the last meeting, the ECB had raised the key interest rate by 0.5 percentage points.
Gas prices in Europe have more than tripled since the beginning of the year. According to experts, there is still no end in sight. Gas prices are likely to jump up again in October when many suppliers in Germany are to levy the gas levy for the first time.
