IMF warns against severe impacts of total shutoff of Russian gas

IMF warns against severe impacts of total shutoff of Russian gas
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According to a recent IMF report, many European countries may face severe economic downturns if Russia decides to keep the Nord Stream 1 pipeline closed.

The International Monetary Fund (IMF) released a report Tuesday warning that some European countries may slump into recession in the case of a full shutdown of the Russian natural gas.

The report has been published amid speculations that Russia might keep the Nord Stream 1 pipeline closed, in a move to respond to EU sanctions imposed upon its invasion of Ukraine, when routine annual maintenance ends later this week.

While Europe is currently enduring a partial cutoff of gas exports from its largest energy supplier, a total shutoff is likely to lead to increasing energy prices and eventually to other economic impacts which governments are not yet prepared to deal with.

The IMF predicts that the countries in Central and Eastern Europe, particularly Hungary, the Czech Republic and the Slovak Republic, could be the most-affected ones.

For the three countries, there is a risk of shortages of as much as 40 percent of gas consumption and of gross domestic product shrinking by up to 6 percent, according to IMF report.

As Italy may be expected to suffer an equally severe impact due to its high reliance on gas in electricity production, countries like Germany and Austria will feel the effects significantly, if not as strongly.

Sweden, Denmark and Greece are likely to see little or no impact on growth.