European Recession Is Likely, Experts Say
A drop in gas flow from Russia to Europe is likely to tip the region's economy into a recession, according to Fitch Ratings. "Continued disruption of gas imports through the Nord Stream 1 pipeline, unless offset with higher flows via other pipelines, would hinder the continent's ability to meet gas needs during the peak winter heating season, despite efforts to build reserves and reduce reliance on Russian gas," the report reads. "This means gas rationing to industrial users is now an increasingly likely scenario, which we estimate could cut eurozone GDP growth by between 1pp and 2pp in 2023."
The euro also slumped to a two-decade low on Tuesday, and the pound fell to its lowest since the start of the pandemic as a "jump in natural gas prices intensified the strain on the European economy," The Guardian reported.
"Fears that the energy crisis in Europe is about to get a whole lot worse sank the euro, which plummeted to the lowest since late 2002, crashing below the $1.03 level. Aside from the threat of Russia cutting off gas supplies to Germany and other European importers, a strike at several gas fields in Norway is fueling the supply concerns," Raffi Boyadjian, lead investment analyst at XM, told the news outlet.