Amid speculation that Russian President Vladimir Putin will keep the Nord Stream 1 pipeline shut when annual routine maintenance is completed later this week, the IMF said Europe lacked a comprehensive plan to deal with shortages, further increases on energy prices and the impact on growth. . The Washington-based fund identified Hungary, Slovakia and the Czech Republic as the three EU countries likely to suffer the most, but said Italy, Germany and Austria would also be significantly affected. “The prospect of an unprecedented outage is fueling concerns about gas shortages, even higher prices and economic impacts. While policymakers are moving quickly, they lack a plan to manage and minimize the impact,” IMF officials said in a blog post. “Our work shows that in some of the most affected countries in Central and Eastern Europe, there is a risk of shortages of up to 40% of natural gas consumption and a contraction of gross domestic product of up to 6%. “The impact, however, could be mitigated by securing alternative energy supplies and sources, easing infrastructure bottlenecks, encouraging energy conservation by protecting vulnerable households, and expanding gas sharing solidarity agreements between countries”. The IMF said Europe’s energy infrastructure and global supply had so far faced a 60% drop in Russian gas deliveries since June last year, but underlined the potential cost if the Kremlin responded to Western sanctions by “hardening” the energy supply. Russia’s invasion of Ukraine has already led the fund to cut its forecast for global economic growth to 3.6% this year and will announce a further downgrade later this month. Total natural gas consumption in the first quarter of 2022 was down 9% year-on-year and alternative supplies were being tapped, notably liquefied natural gas (LNG) coming from global markets. “Our work shows that a reduction of up to 70% in Russian natural gas could be addressed in the short term with access to alternative supplies and energy sources and given reduced demand from previously high prices,” the IMF said. “However, diversification would be much more difficult in a complete shutdown. Bottlenecks could reduce the ability to reroute natural gas within Europe due to insufficient import capacity or transport constraints.” Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk The IMF said that in the event of a total shutdown, the EU could suffer a drop in economic output of almost 3% over the next 12 months. Some countries, such as Sweden, Denmark and Greece, will see little or no impact on growth, but Italy, due to its high reliance on natural gas for electricity generation, could take a hit of more than 5%. “The effects in Austria and Germany would be less severe but still significant, depending on the availability of alternative sources and the possibility of reducing household gas consumption,” the fund said. The IMF blog said EU governments should step up efforts to secure supplies from global LNG markets and alternative sources, address bottlenecks in gas import and distribution infrastructure, have a strategy to share supplies in the event of an emergency, encourage energy conservation by protecting vulnerable households and prepare. smart’ gas voucher programs.
