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Station of the Nord Stream 1 Baltic Sea pipeline: has been supplying gas from Russia since 2011
Photo: Stefan Sauer / dpa
A further escalation of the conflict with Moscow could hit the German economy hard if there were a complete ban on imports of Russian energy.
According to model calculations by the Bundesbank, a recession would then threaten.
"In the aggravated crisis scenario, real gross domestic product in the current year would fall by almost two percent compared to 2021," said the central bank's current monthly report.
Since it would hardly be possible in the short term to completely compensate for supply shortfalls from Russia with increased imports from other producing countries, there are likely to be bottlenecks in the gas supply in particular.
More than half of the gas imports in Germany come from Russia.
The central bankers base their assessment on simulation calculations using the Bundesbank's macroeconometric model.
According to the institution, this allows for a detailed analysis of the impact of the individual shocks, especially on consumer prices.
Likewise, government measures can be implemented comparatively precisely.
Inflation may be high until 2024
The economists wrote that the consequences of a delivery stop would also weigh on the German economy in the next two years and lead to a drop in growth.
The inflation rate is likely to be significantly higher for a long time due to rising energy prices.
According to the calculations, inflation should be around 1.5 percentage points higher this year, mainly due to rising energy raw material prices.
"The effects are even greater in the following year," write the experts.
Even in 2024, inflation would still be higher, but then not as much.
Nevertheless, according to the model calculations made in March, Europe's largest economy would not shrink as much this year as in the corona crisis year 2020. The Bundesbank economists attributed this to the "comparatively dynamic recovery phase" after the crisis.
In the first Corona year 2020, the gross domestic product collapsed by 4.6 percent.
Last year, the German economy regained its footing and grew by 2.9 percent.
The Bundesbank pointed out that the model calculations are subject to considerable uncertainties and that future developments can "both overstate and understate".
Corona recovery slowed down
In principle, according to the central bank, the economic effects of the war in Ukraine will “considerably weaken the strong recovery that is actually planned”.
Among other things, disrupted supply chains, drastically increased energy prices and increased uncertainty weighed on companies and private households.
The extent of the economic consequences of the war is still very uncertain and depends on its further progress.
The central bank expects economic output to roughly stagnate in the first quarter of the current year.
Before the start of the Russian attack on Ukraine on February 24, the supply bottlenecks in the industry would have eased somewhat.
In addition, the construction benefited from the mild weather, the economists justified their assessment.
At the end of last year, the fourth corona wave and the tightened protective measures against the spread of the pandemic had stopped the economic recovery.
Gross domestic product shrank by 0.3 percent in the fourth quarter compared to the previous quarter.
Apr/dpa/Reuters