A serious shortage of natural gas supplies could trigger “a chain reaction with unforeseeable consequences” for the German economy, said Commerzbank, one of the country’s biggest corporate lenders.
The German bank warned on Wednesday of a “severe recession” in the country if Russia cuts off gas supplies, saying it could trigger an economic crisis similar “to the one that occurred after the financial crisis in 2009”.
Commerzbank added that the rationing of gas would then “probably be inevitable”.
Germany’s banks are particularly exposed to the huge increase in gas prices triggered by Russia’s move last month to sharply reduce supplies. Prior to Moscow’s invasion of Ukraine, Germany imported 55 percent of its natural gas from Russia, but supplies through the Nord Stream 1 pipeline have fallen to a fifth of its capacity and policymakers fear that they might be cut completely.
In such a scenario, German economic activity would shrink by 2.7 percent this year and 1.1 percent in 2023, Commerzbank estimates. The IMF, which slashed its GDP forecast for Germany last month, still predicts an 1.2 percent increase in GDP for 2022 and a 0.8 percent increase next year. Commerzbank chief executive Manfred Knof said he still had “ambitious feelings” about Germany’s economic prospects.
The German government is preparing for gas rationing this winter and frantically trying to find other sources, encourage energy savings and fill up the country’s gas storage.
Commerzbank said the impact of shortages would spread quickly through the German economy since natural gas is not just a crucial source of energy but is also an important raw material used in other industries.
The bank said the chemicals and plastics industry accounted for 1.1 percent of its credit exposure. Other sectors highly exposed to potential shortfalls in gas supplies and surging energy costs — utilities, construction and the paper industry — contribute another 3.8 percent of the bank’s loan book of €384bn.
The lender pointed to BASF, the world’s largest chemicals company by revenue, which has said that the group’s vast production site in Ludwigshafen would have to be shut down should gas supplies fall below 50 percent.
However, global players such as BASF can temporarily soften potential supply setbacks thanks to their plants in the Americas, Asia and less affected parts of