Note: it will cost the German people 175 billion euros. That means you. The German aristocracy will only profit.
The actual study seems to be unavailable and the article itself (from a right-wing rag) is so low on details that it is hard to say if the actual study makes more sense (but I am doubtful as this “institute” is just a shitty big-industry lobby organisation).
But according to the article they compared two imaginary simulations for 2023, and the result was 4.5% points less GDP. Besides the fact that this institute is not exactly known for their high quality economic simulations, this also makes little sense. As it currently does not look like there will be a deep recession in 2023, this can only mean the 4.5% are mostly less positive growth in their simulation. As Germany didn’t have such strong economic growth in many years this makes their “no war” simulation seem hilariously optimistic, and thus their “loss” calculation likely a huge over-estimate.
Also less positive growth is not the same at all as “costing” something. It just means that you don’t increase your earnings as much.
The study looks to be very much available.
Also not sure what the idea that Germany isn’t headed for a deep recession is based on given that nobody can explain how Germany plans to refill gas stores that were filled up using Russian gas last year.
Ah thanks, a quick search on their website didn’t show it.
There are more serious economic studies and forecasts and they don’t forsee anything close to 4.5% shrinking of the economy. But I will have a closer look at the .pdf to see how they massaged their data to come to such a widely unrealistic outcome.
Edit: ah, it is already on the first page it seems. They just assume the year 2019 growth figures and extrapolate that as if the pandemic (!) and the war in Ukraine never happend 🤦
Edit2: Ugh, this is even worse than expected. The 3 page “study” doesn’t even talk about 2023. Its from November 2022 and already hilariously bad for that. But from which of their asses they pulled the press-release numbers for 2023 is totally nebulous.
Again, as far as I’m aware, Germany doesn’t have a serious plan to replace Russian energy this year. Currently, the energy prices are being softened by the fact that Germany filled up gas stores, but once they run out what exactly is the plan for refilling them?
It’s also worth noting that, despite all the talk of replacing Russian energy, what’s actually happening is that Germany, along with the rest of Europe, are importing Russian energy from resellers at a significant markup.
Significant increase in input costs certainly does look like it would lead to a significant recession, and we’re already seeing significant portions of the industry shutting down:
- https://cen.acs.org/business/economy/Energy-woes-force-plants-close/100/i36
- https://www.politico.eu/article/germany-industry-europe-energy-prices-basf/
- https://www.bloomberg.com/news/articles/2023-01-06/german-factory-orders-slump-as-manufacturers-remain-under-siege
- https://toronto.citynews.ca/2023/01/06/german-factory-orders-down-sharply-contining-trend/
Industry shutdown translates to people being laid off from their jobs driving up unemployment. That’s what drives recessions historically.
I’d be curious to know the rationale behind your claim that it currently does not look like there will be a deep recession in 2023.
Long term gas futures are lower than pre-war prices meaning the market expects the gas prices to stay relatively cheap in the years to come. In fact there is an expected over-supply and Russia will have trouble even finding buyers at all but the most bargain-bin prices.
You need to lay off on your right-wing and Russian propaganda outlet news and read some serious economic forecasts. (Edit: yes the expected over-supply is partially because of lower demand due to an global economic downturn).
I’m not aware of any serious analysis claiming there are any long term trends of cheap gas futures. There is simply no reason for that to be the case logically speaking. It’s not like huge new reserves of gas have magically become available. So, on what basis exactly are you claiming that gas will be cheap?
Meanwhile, with China reopening, there is going to be increased demand for energy, and in fact we’re already seeing signs of that happening. That means that spot prices for gas will be going up as opposed to down. That’s how supply and demand work. Anybody who is actually reading serious economic forecasts understands these things.
Meanwhile, you’re just regurgitating liberal propaganda that everything is going great, and there aren’t any problems. That’s not serious economic analysis I’m afraid.
Yes I can see that you are “not aware”. Maybe try to look outside of your media bubble a bit?
I am not saying everything is going great, quite the contrary. But high gas prices will not be the major issue, as depressed demand will ensure prices stay relatively low.
As for an serious analysis, maybe look at this.
Yes I can see that you are “not aware”. Maybe try to look outside of your media bubble a bit?
I look at the liberal media bubble all the time, I don’t find it to be terrible convincing.
But high gas prices will not be the major issue, as depressed demand will ensure prices stay relatively low.
You do realize that depressed demand is a sign of reduced economic activity otherwise known as a recession?
However, as I’ve repeatedly noted in this thread and you’ve repeatedly ignored, the reason European demand is low is largely a factor of Europe having stocked up the reserves using Russian pipeline gas while it was available. Surely even you can understand that refilling these reserves will drive demand up.
Your own link is saying precisely what I’m telling you:
We still expect that there will be no Russian gas flowing into the EU in 2023. Europe will be more reliant on LNG supplies and face competition from Asian buyers.
- EU will not be able to rely on Russian gas in 2023 and will be stuck buying LNG from US
- Increased economic activity in Asia driven by China reopening will increase LNG prices
However, warm weather, a reduction in European demand, primarily due to lower consumption by industrial users, and continuing vast LNG supplies to Europe led to spot prices declining from their peaks, despite modest increases once winter started.
LNG prices declined from their peaks, but remain vastly more expensive than pipeline gas as well as being volatile. The article admits this:
We have therefore cut our near-term assumptions for European gas prices, although they will remain high compared to historical averages and highly volatile.
The article also dances around the elephant in the room which is what happens when gas reserves run out, which is projected to happen in spring to summer this year. It indirectly alludes to the fact that Europe will be forced to buy LNG, but doesn’t delve into implications of that statement. One particular problem it avoids discussing is how the LNG will be stored given that you can’t reuse storage facilities for pipeline gas for it.
Finally, the predictions about oil are also far less optimistic when you look at them closely:
Oil market supply will be affected by declining Russian exports, including due to an EU embargo on imports from the country (with a few countries exempted), slower US shale production growth, and a potential revival of the Iranian nuclear deal that could unlock more oil exports, although the likelihood of this has reduced following the violent crackdown on protests in the country.
What this says is that global oil output is expected to shrink, and there is much uncertainty around oil prices in the near future. The article doesn’t even mention the fact that US is rapidly draining its strategic reserve right now, and will lose the ability to stabilize prices once it’s depleted.
Seems that your upbeat outlook may stem from your poor reading comprehension rather than your sources contradicting what I’m telling you.
