Impact of energy and inflation crises worse than forecast, with Europe most directly exposed to fallout of Russian invasion
The world’s leading economies are sliding into recession as the global energy and inflation crises sparked by Russia’s invasion of Ukraine cut growth by more than previously forecast, according to the Organisation for Economic Co-operation and Development (OECD).
A dependency on expensive gas for heavy industry and home heating will plunge Germany, Italy and the UK into a long period of recession after global growth was projected by the OECD to slow to 2.2% in 2023 from a forecast in June of 2.8%.
With the global economy needing to grow by about 4% to keep pace with rising populations, the OECD said incomes per head would be lower in many countries.
OECD’s interim chief economist, Álvaro Pereira, said the world was paying a steep price for the Ukraine war and Russia’s decision to restrict access to gas supplies more tightly than was forecast in June.
He said governments would need to encourage households and businesses to reduce their consumption of gas and oil to help weather a difficult winter.
Pereira also supported the determination of central banks to reduce inflation by raising interest rates. “We need to reduce demand, there is no doubt about that. And monetary and fiscal authorities need to work hand in hand to achieve it,” he said.
China’s growth rate is expected to drop this year to 3.2% – its lowest since the 1970s – causing a large decrease in trade with neighbours South Korea, Vietnam and Japan, dragging down their capacity to grow.
A recovery in China next year to 4.7% will be weaker than expected, the OECD said, as Beijing wrestles with a property market and banking sector weighed down by huge debts.
However, the Paris-based policy forum was most alarmed by the outlook across Europe, which is most directly exposed to the fallout from Russia’s war in Ukraine.
The OECD forecast that UK GDP growth would be flat in 2023. However, this projection does not take into account the measures announced in the chancellor Kwasi Kwarteng’s mini-budget on Friday.
The OECD forecast a drop in growth in the eurozone from 3.1% this year to only 0.3% in 2023, meaning that many countries in the 19-member currency bloc will spend at least part of the year in recession. A recession is defined as two straight quarters of contraction.
France could escape a recession if it grows by 0.8% next year as predicted by the OECD, but will suffer along with other European countries after the downgrade in GDP growth since June of 1.3 percentage points.
Russia will shrink by at least 5.5% this year and 4.5% in 2023. Berlin’s dependence on Russian gas before the invasion means the German economy will shrink by 0.7% next year, down from a June estimate of 1.7% growth.
The OECD warned that further disruptions to energy supplies would hit growth and boost inflation, especially in Europe, where they could knock activity back another 1.25 percentage points and increase inflation by 1.5 percentage points, pushing many countries into recession for the full year of 2023.
Global output next year is projected to be $2.8tn (£2.6tn) lower than the OECD forecast before Russia attacked Ukraine – a loss of global income equivalent to the UK economy.
“The global economy has lost momentum in the wake of Russia’s unprovoked, unjustifiable and illegal war of aggression against Ukraine. GDP growth has stalled in many economies and economic indicators point to an extended slowdown,” the organisation’s secretary-general, Mathias Cormann, said.
A review of the outlook for the US found that while it is likely to grow slowly this year and be in recession for part of 2023, it was less dependent than other countries on energy from Russia or other sources, allowing for a strong recovery in 2024.
The OECD forecast that the world’s biggest economy would slow from 1.5% growth this year to only 0.5% next year, down from June forecasts for 2.5% in 2022 and 1.2% in 2023.
World Bank officials have called on central banks to refrain from competitive rate hikes that will push the global economy into recession and harm the economies of developing countries the most.
Nevertheless, the OECD said further rate hikes were needed to fight inflation, forecasting that most major central banks’ policy rates would reach at least 4% next year.
Leading economies sliding into recession as Ukraine war cuts growth, OECD finds | Business | The Guardian
There was an act of sabotage on German/Russian infrastructure. Nord stream 1 and 2. This was days after Putin said he was open to filling NS2.
If you cant figure this one out then nobody can help you
https://www.aljazeera.com/favicon_aje.ico
September 17th
Putin tells Europe: if you want gas then open Nord Stream 2
Putin tells Europe: if you want gas then open Nord Stream 2 | Reuters
Oh look skiddy is back. I wonder whose opinion he's copying now?
Who Will Rid Me of This Meddlesome Gas Pipeline? | National Review
"Sometimes it takes a little while, but the Corner gets results, even in matters of geopolitical energy. Way back in February 22, under the headline, “Nice New Pipeline You’ve Got There. Shame If Something Happened to It,” I wrote of the Nord Stream 2 pipeline:
Still, halting the certification process is a temporary stop; the pipeline is still there, constructed, waiting to be used. It is not difficult to envision a scenario where the German government finds some excuse to reopen the certification process and start using the pipeline, after issuing the appropriate pro forma objections to Putin’s actions
OR, Putin sabotaged the pipelines just as a demonstration to prove Russia can.
WHY? ...
New Polish gas pipeline from Norway to reach full capacity ahead of schedule
Poland’s new pipeline bringing Norwegian gas via Denmark and through the Baltic Sea – which is due to open this week – will be able to transport up to twice as much gas as previously planned this year due to the faster-than-expected progress of work.
The Baltic Pipe, which is seen as a key element in Poland’s diversification away from Russian energy sources, is due to begin transporting gas this Saturday, 1 October, with an initial capacity equivalent to 2-3 billion cubic metres (bmc) per year.
It was then expected to reach its full capacity of 10 bcm of gas per year at the start of 2023.
However, on Saturday Danish gas system operator Energinet announced that work “is progressing so well” that full capacity is due to be reached by the end of November this year.
New Polish gas pipeline from Norway to reach full capacity ahead of schedule | Notes From Poland
Nope. Don't even try.
Poland and the US are gloating about it. Polish politicians are in effect admitting they did it. So no. You don't get to "Putin done it" on this one. Sorry.
Putin tabled the idea of starting NS2 up just days ago. And then it got taken out. And NS1 for good measure. Both pipelines that Russia and Germany have billions invested in.
Well whoever has done this- and it surely wouldn't have been either Germany or Russia- my only comment is REAL DUMB.
It has set a precedent, and declared that sabotaging essential oil and gas pipelines is both easy, and not Off Limits.
"If They can do it, We can do it too". The whole World takes note. Not unlike unleashing a nuke. REAL DUMB.
Whoever has done it has also unilaterally declared themselves an enemy of Germany too.
You have no idea who might be responsible for the supply chain damages.
Im sure that there are organizations who are responsible for it, but no one really knows who they are, least of all you, with your twisted logic.
You are observing from a distance, using what little you might think you know, to determine who might be responsible. The global nature of it is actually beyond your comprehension, so making your assertion that it is dumb, does no one any favors.
Do yourself and everyone else a favour by the simple expedient of shutting up. You are too far removed from the situation, and not smart enough to understand the depth, complexity and reach of the likely cause.
You are entitled to hold your opinions, but not such a subject matter expert to use such opinions, in order to try and sway the opinions of others. I believe in the adage that “a little knowledge is a dangerous thing”. The likes of you, backspin and OhOh prove that because your combined lack of understanding makes it glaringly obvious.
“Better to remain silent and be thought a fool, than to speak out and remove all doubt”
Better to remain silent and be thought a fool than to speak out and remove all doubt.”
I have determined who is not responsible, using the simplest of logic. I have not ventured to suggest who is. And it was REAL DUMB- reckless and irresponsible. If you don't like reading that, tough shit- just put me on ignore. Have a nice day.
If Putin wanted to turn off the gas, he only needs turn off the spigot- hardly requires a special op, in an operation that both Germany and Russia have invested billions in.
Analysis-Russia's Ukraine Gas Transit Sanction Threat a Fresh Blow for Europe
By Reuters
Sept. 28, 2022, at 7:47 a.m.
LONDON (Reuters) -If Moscow carries out a threat to sanction Ukrainian energy firm Naftogaz, one of the last functioning Russian gas supply routes to Europe could be shut, exacerbating the energy crisis just as the crucial winter heating season begins.
"Naftogaz initiated a new arbitration proceeding against Gazprom earlier this month, saying the Russian company has not paid transit fees for sending its gas to Europe via pipelines that cross Ukraine.
Gazprom this week rejected all the claims, adding that Russia may introduce sanctions against Naftogaz in the case that it further pursues the matter. Such sanctions would prohibit Gazprom from paying Ukraine transit fees, which analysts say could end Russian gas flows to Europe via the country.
Yuriy Vitrenko, chief executive of Naftogaz, said the company will continue with arbitration proceedings against Gazprom regardless.
"(Sanctions) would make into reality the worst-case scenario that European governments have been preparing for all summer, a European gas market without Russian gas," said Natasha Fielding, head of EMEA gas pricing at Argus Media.
"Transit through Ukraine is the only Russian gas delivery route to Europe still in use besides the Turkish Stream pipeline, which serves southeast European countries," she added.
Dutch wholesale gas prices, the European benchmark, shot up after Gazprom's talk of sanctions on Tuesday, and rallied as much as 13% on Wednesday to stand around 120% higher since the start of the year.
Gas flows via the only operational Ukraine transit route through Sudzha are currently around 42 million cubic metres a day. Kyiv had already in May suspended the Sokhranivka route which delivered almost a third of the fuel piped from Russia to Europe through Ukraine, declaring force majeure.
According to data from think-tank Bruegel, the European Union (EU) imported around 155 billion cubic metres (bcm) of gas from Russia last year or about 12.9 bcm a month.
Russian gas imports from the start of 2022 to the end of last week stood at 60 bcm, compared with 81 bcm in the first half of last year alone, according to Bruegel's data.
Leaks detected on the Nord Stream 1 pipeline this week make a resumption of flows on that route unlikely after they were cut to a fraction of capacity and finally suspended last month with Moscow citing the need for maintenance.
Meanwhile the Yamal-Europe pipeline has been flowing eastbound from Germany to Poland for much of this year, although it has been in stop-start mode for weeks.
WINTER RISK
Should the Sudzha flows come to a halt, the only Russian gas being piped to Europe would be via Turkey and the Black Sea through TurkStream, which has an annual capacity of around 31.5 bcm.
Gazprom ramped up supply to Hungary via the pipeline in August but overall Europe has been preparing for months for a complete stoppage of Russian gas deliveries this winter.
Governments have been scrambling to diversify supply, buying more liquefied natural gas from suppliers such as the United States, Qatar and Egypt, as well as introducing measures to curb demand domestically and save energy.
As a result, European gas storage was 88% full as of Sept. 26, although there are variations between countries.
"There needs to be a combination of 'ifs' to threaten Europe's energy supplies this winter, including a harsh winter, prolonged French nuclear outages, and other infrastructure issues," said Norbert Rücker, head of economics and next generation research at investment bank Julius Baer.
However, a greater risk remains for next winter as countries will end this year's winter gas season with very low stocks and have less Russian pipeline gas available than ever before to replenish stocks during the spring and summer.
(Reporting by Nina Chestney; Additional reporting by Christoph Steitz; Editing by Pratima Desai, Kirsten Donovan and Marguerita Choy)"
Analysis-Russia'''s Ukraine Gas Transit Sanction Threat a Fresh Blow for Europe
The headline is a little bit out. As it posts"
"Transit through Ukraine is the only Russian gas delivery route to Europe still in use besides the Turkish Stream pipeline,"
The author emphasises the "winter risk", but spring/summer/autumn/winter in following years are not addressed.
Last edited by OhOh; 30-09-2022 at 04:23 PM.
A tray full of GOLD is not worth a moment in time.
So if Ukraine wanted to fuck things up, would they:
(a) Use technology they don't have to fuck up pipelines miles away which are also near a Russian naval base equipped with everything needed to do the job?
(b) Blow up "one of the last functioning Russian gas supply routes to Europe" which just happens to be right in front of them?
So we all know who sabotaged the pipelines, don't we Vlad?
The next post may be brought to you by my little bitch Spamdreth
30 Sep, 2022 12:42 HomeBusiness News
Ruble surges against euro and dollar
The world’s top reserve currencies have nosedived on the Moscow Exchange amid geopolitical uncertainty
"The Russian ruble strengthened to new highs against the Euro and US dollar during Friday trading on the Moscow Exchange amid the threat of further Western sanctions, as the two Donbass republics, as well as the Zaporozhye and Kherson regions, are set to become part of Russia.The euro was trading at an eight-year low against the Russian currency, at 51.1 rubles as of 12:10 GMT. The EU currency briefly sank below 51 rubles at one point. The dollar rate fell below 54 rubles for the first time since July.
Both top global reserve currencies have been declining against the ruble amid rising geopolitical tensions. The Russian denomination has remained strong in recent months partly due to limited demand from importers, which are already grappling with the effects of the sanctions on Moscow.
Analysts explain the imbalance in the ratio of the currencies by the large-scale sales of the euro and the dollar in the absence of demand on the Moscow Exchange. On Thursday, the adviser to the first deputy chairman of the Central Bank of Russia, Sergey Moiseev, said exchange trading in the dollar and euro could be halted if sanctions are introduced against the Moscow Exchange."
https://www.rt.com/business/563797-ruble-rises-against-euro-dollar/
30 Sep, 2022 12:42
HomeBusiness News
Eurozone records first ever double-digit inflation
Consumer prices surged 10%, beating expectations and piling pressure on the ECB.
"Consumer prices in the Eurozone saw massive year-on-year growth of 10% in September, marking a new record high that increases pressure on the European Central Bank (ECB) to aggressively tighten monetary policy.Inflation across the euro area increased from August’s 9.1% print, data from Eurostat showed on Friday, beating the median forecast of 9.7%, and marking the fifth straight month of price growth outpacing analysts’ forecasts.
Inflation is still being driven by spiralling food and energy costs. Energy prices, which surged at an annual rate of 41% in September, were the main contributor to the soaring inflation in the 19 countries that use the euro. Meanwhile, prices for unprocessed food rose 13%.
Excluding volatile food and energy prices, inflation still soared to 6.1% from 5.5% in August, while an even narrower measure that also excludes alcohol and tobacco rose to 4.8% from 4.3%.
Continues at:
https://www.rt.com/business/563801-e...n-energy-food/
3 Oct, 2022 17:35 HomeBusiness News
Switzerland resists handover of Russian assets to Ukraine
The country will not confiscate frozen property to support Ukraine, the Economy Ministry has said
"Switzerland does not support Ukrainian President Vladimir Zelensky’s request to hand over frozen Russian assets to Kiev, a spokesman for the Swiss Federal Department of Economic Affairs, Education and Research, Fabian Maienfisch, told RIA Novosti on Monday.“For the Swiss government, the confiscation of assets only on the basis of belonging to a state or being included in the sanctions list and using them to rebuild Ukraine is currently not an option of showing support for Ukraine,” Maienfisch said.
The remarks come after Zelensky asked Switzerland last week to block Russian assets and transfer them to Ukraine..... "
Continues here:
Switzerland resists handover of Russian assets to Ukraine — RT Business News
3 Oct, 2022 15:39
HomeWorld News
EU split on Russian oil price cap escalates – Politico
Despite opposition from multiple members, the bloc wants to press ahead with the controversial step.
"The European Union will reportedly not impose an eighth round of sanctions on Moscow unless its member states agree to include a price cap on Russian oil exports.
This move has been opposed by several states and could further damage the bloc’s already reeling economy.
EU ambassadors met in Brussels on Monday morning in a bid to hammer out an agreement. In addition to penalties on Russian politicians and export restrictions on chemicals, electronics and aviation components, the leadership wants to impose a price cap on seaborne Russian oil exports.
Despite opposition from Hungary – which has opposed any further sanctioning of Russian energy – and pushback from Greece, Cyprus and Malta, an EU diplomat told Politico that “there will be no sanctions package without the oil price cap.”
The restriction would work by placing an embargo on all seaborne oil imports from Russia priced above a certain point. The amount would be set just above the cost of production, giving Russian producers just enough revenue to stay in business, while denying them the record profits they have been reaping since earlier sanctions drove market prices skyward.
The embargo would likely be enforced by shipping insurance firms, which would deny insurance to consignments of oil priced above the fixed point.
However, Russia could respond by simply refusing to ship its oil to countries paying such low prices, and sell it to other foreign buyers. Turkey, China and India are the three largest non-EU importers of Russian fossil fuels, and none would be obliged to abide by the new sanctions. While 90% of the global oil shipping fleet is insured by London-based firms (the UK supports the price cap), China and India already accept cover from Russian insurance companies.
Hungary has opposed not just the price cap, but any sanctions on Russian energy, while Greece, Cyprus and Malta have large shipping industries and worry that the new package could deprive them of vital revenue, Politico reported, citing multiple diplomats."
https://www.rt.com/news/563978-sanctions-oil-price-cap/
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