International credit rating agency Fitch Ratings has stated that the complete natural gas supply halt through the Nord Stream 1 pipeline further reduces the already small margin for error to balance the EU natural gas market this winter.
Noting that the halt further increases the likelihood of a recession in the euro zone, the agency expects the euro zone’s GDP in 2023 to decrease by 1.5-2 percentage points. Previously, Fitch forecast that the euro zone economy would grow by 2.6 percent this year and 2.1 percent in 2023.
Fitch Ratings said that it assumes no Russian natural gas flows to Europe between September and December of the current year.
Russia indicates that it will not resume natural gas supplies until the Western sanctions against the country over the invasion of Ukraine are lifted. However, the EU’s plan to increase liquefied natural gas imports and reduce natural gas use is expected to help to avoid acute shortages.
Saying that the exposure to the Russian natural gas halt varies among EU countries, Fitch stated that those with a high dependency on Nord Stream 1 supplies and low immediate options to diversify gas sources, like Germany, have limited room for maneuver. However, Germany has already achieved a 13 percent reduction in natural gas demand in the first five months this year. The German government decided to impose a natural gas surcharge on manufacturing industries to maintain stability of the natural gas supply, as SteelOrbis previously reported.