Europe can't survive Russian gas ban beyond 6 months, expect significant effects: IMF

As the European Union is weighing the impact of the imposition of an embargo on Russian gas, International Monetary Fund (IMF) head of European Department, Alfred Kammer, flagged that Europe can get as far as six months without a regular supply of Russian energy imports.

The senior IMF official forecasted that beyond the time frame, European nations would have to bear a heavy economic impact in the absence of reliable and inexpensive alternative supplies. Kammer also suggested that the countries dependent on Russian gas in the region must ensure a series of steps to ease the blow if the EU bans Russian energy imports.

The IMF official advised that the countries must reduce consumption and increase inventory. He explained the problem is stemmed from the heavy reliance of European nations on Russian natural gas. Notably, the EU's 43% natural gas is imported from Russia, making Moscow the largest supplier, by far.

Some countries like Latvia, and Finland are 90% dependent on Russian energy as per data from 2020. If the EU sanctions Russian gas, it will imply a substantial hit to the economy.

Manufacturing of fertilizers, chemicals, and glass would come to a possible standstill.

"Over the first six months, Europe can deal with such a shut-off (with) alternative supplies and extra storage," Kammer explained. However, a longer duration of the ban, say until winter, would lead to "significant effects," he added.

Ban on Russian gas means 3% loss in EU GDP

The IMF forecast says a ban on Russian gas and oil could cost the EU at least 3% of its GDP, depending on the conditions of winter. Kammer also noted that the EU countries must look for alternative suppliers and implement smaller measures to ensure a larger potential impact.

Further, he advised governments to run "public campaigns to reduce energy consumption" and increased storage. Speaking about Ukraine, Kammer said that while the economic growth has slowed sharply for Ukraine, it will "not detail" or lead to a Europe-wide recession.

The Russian war has also led to an influx of refugees to EU nations, leading to increased energy requirements. Poland is the most affected, with thousands of refugees. Kammer, however, pointed out that if the refugees decide to stay in the neighbouring nations it will be a "bad situation" for Ukraine.

(Image: AP)