Germany’s economy is already in decline and will continue to do so in the winter months as the natural gas crisis worsens, the Bundesbank said on Monday.
“Economic activity may shrink somewhat this quarter and decline significantly in the fall and winter months,” the central bank said, according to Reuters.
And even if Germany were to avoid strict natural gas rationing, the economy would likely continue to shrink as the industry cuts or freezes production, the Bundesbank added.
However, it does not expect a 3.2% decline in 2023 – the potential decline scenario issued earlier this year – to materialize.
Russia used to supply about 40% of Europe’s gas, but that supply has dwindled dramatically since Vladimir Putin launched his invasion of Ukraine in February.
In recent months, Russia’s state-owned Gazprom has cut gas supplies through the Nord Stream 1 pipeline, and it is now completely shut down.
Meanwhile, Putin shied away from responsibility for Europe’s energy shortages on Friday, saying the European Union could turn on the new Nord Stream 2 gas pipeline, which has been on hold since February, for more supplies.
“The bottom line is, if you have the urge, if it’s so hard for you, just lift the sanctions on Nord Stream 2, which is 55 billion cubic meters of gas per year, you just press a button and everything starts,” he added. Putin said this in Uzbekistan, according to Reuters.