The embargo on energy will hurt Russia hard. The economist ran a simulation

In the face of the escalation of the conflict in Ukraine and European and American sanctions against Russia, economist Hendrik Mahlkow from the IfW institute simulated which Western trade sanctions would hit the Russian economy the most.

“The simulation results showed that a halt in gas trade would reduce Russian economic production by less than 3 percent, and a halt in oil trade by a good 1 percent,” the report said, and “for Germany and the EU, the economic damage would be remarkably small in both cases.” According to the IfW, it does not matter whether the EU introduces an embargo on imports or whether Russia decides to introduce an embargo on exports.

Particularly competitive Germany

The IfW research shows that if gas trade were to be suspended, the German gross domestic product would even show a slight increase, by 0.1 percent. “This would happen because the Western allies would replace Russia’s missing imports with products from allied countries, and here Germany is particularly competitive,” says the Kiel Institute of World Economy.

“In the event of a gas embargo, Germany would have a price advantage in, for example, energy-intensive metal production or processing, as its energy mix consists of only relatively little Russian gas,” concludes the IfW.

According to the Institute’s calculations, a trade embargo on oil would reduce economic production by 1.2%. in Russia, but only by 0.1 percent. in Germany and the EU. The Institute estimates that the macroeconomic effects of the embargo on machinery and machine parts as well as vehicles and vehicle parts would be smaller. This would shrink the Russian economy by 0.5 and 0.3 percent, respectively. Again, the IfW assesses the effects on the economic performance of Germany and the EU as minimal. (DPA / like)