The German economy has coped with the end of Russian gas supplies and would have also been able to withstand an import stop from April 2022. This is the result of ananalysis of a team around Prof. Dr. Moritz Schularick, member of the Cluster of Excellence ECONtribute of the Universities of Bonn and Cologne and designated President of the Kiel Institute for the World Economy, joint with Prof. Dr. Benjamin Moll (London School of Economics) and Dr. Georg Zachmann (Bruegel). The study has been published as “ECONtribute Policy Brief”.
For their analysis, Schularick and his colleagues rely on recently published gross domestic product (GDP) figures. These confirm that the German economy has withstood the end of Russian gas imports. “This result should finally end last year’s debate on the effects of an import stop of Russian energy,” says Moritz Schularick, professor at the Cluster of Excellence ECONtribute at the University of Bonn. In spring 2022, with a team of collborators he implemented a macroeconomic model to quantify the economic consequences of an embargo of Russian energy imports. The analysis predicted a GDP decline up to three per cent compared to a scenario without an embargo.
Adaptability of industry widely underestimated
GDP grew by just under two per cent in 2022, even though Germany was partially cut off from Russian gas supply in June followed by a complete ban in August. Yet Germany managed to avoid a recession during the heating period. According to preliminary estimates, GDP initially contracted by 0.5 per cent in the fourth quarter of 2022, but then stagnated in the first quarter of 2023. The figures confirm what the researchers predicted last spring: industry adapted to the energy crisis and saved gas. While production in energy-intensive sectors such as chemicals and glass fell sharply, other sectors have been hardly affected, according to the German Federal Statistical Office. “Market economies have an enormous adaptability that has been massively underestimated,” says Schularick. In addition, he says, Germany has been very successful in rapidly procuring gas supplies from other countries and implementing capacity for Liquefied Natural Gas (LNG).
The result was not driven by mild winter temperatures, he adds. The average winter temperature of 2.9 degrees Celsius in winter season 2022/23 was actually slightly colder than the average temperature in the four previous winters, according to the German Weather Service. In addition, the outage of many French nuclear power plants and the fire at the largest U.S. LNG plant made the adjustment much more difficult.
Economy could have also withstood import freeze in April 2022
Even if gas imports from Russia had ended at the end of March 2022, Germany would have made it through the winter without any gas shortages. The data on gas imports and gas storage levels at the end of the heating period show that Russian gas imports after March 2022 have not been crucial to secure gas supply in Germany. Taking into account imports of Russian gas via other countries as well as re-exports, Germany imported about 100 terawatt hours of gas from Russia between April and August 2022, which corresponds to about 40 per cent of the maximum storage capacity. In April 2023, gas storage was about 65 per cent full. If imports had stopped in April 2022, Germany would therefore have survived the winter with gas storage facilities filled up to 25 per cent. Since a shutdown in early April 2022 would have coincided with the end of the previous heating season and a drop in household demand, gas stocks would have been sufficient to meet both industrial and household gas demand at all times, according to calculations.
“The idea that Germany was lucky to get through the winter was considerably overrated in the public debate”, says Schularick. The success, he concludes, was mainly due to the economy’s ability to adapt in combination with good economic policy.
Press & Communication
Tel. +49 221 470 7258
Prof. Dr. Moritz Schularick
ECONtribute, University of Bonn
Tel. +49 228 73-7976