- One official
The Russian economy is on the brink of recession even before the U.S. announced fresh sanctions. After 15 years of solid growth mostly driven by higher commodity prices Russia's economy is now facing serious problems. Growth stood at 0.9% in the first quarter, while unemployment rate is around 5% and inflation hovers above 7%. However, all these indicators can deteriorate in the foreseeable future. It case Russia decides to freeze gas supplies to the Eurozone, it will also lose money, but what will happen with Europe?
Earlier it was thought that consequences for the 18-nation bloc will be devastating, however, it seems that Europe has enough spare capacity in liquefied natural gas or LNG to meet a huge part of the region's needs. Currently terminals in the U.K. and the Continent are operating at just 20% of their full capacity. That means they can boost flows by 160 billion cubic metres, a figure which is higher than 155 billion exported from Russia over the last year. However, European network of pipelines does not cover the whole region, and will leave pockets in eastern countries without supply, meaning peripheral countries will continue suffering. Despite the fact Germany relies on Russia for about 30% of its gas, the importance of Russian supply is often overstated, as most of the power comes from renewables and nuclear reactors.
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