Moody’s on Germany and Italy: Halt to Russian gas supplies would considerably weaken growth and fiscal metrics
|“When looking at Germany and Italy, the immediate economic repercussions of Russia's plan to restrict supply in mid-June are likely to be limited,” said global rating agency Moody’s on late Wednesday.
Additional comments
Russian gas cuts will prevent reserves from amassing quickly before the winter season.
If Russian supplies don't begin when maintenance on Nord Stream I is finished at the end of July there will be an increase in energy prices.
If Russian supplies stop flowing when the maintenance on Nord Stream I is complete, governments will be compelled to implement some type of rationing.
When Russian gas supplies are cut off, negative economic impacts that will increase both countries' debt burdens.
Italy's financial situation, which is currently difficult, will probably get worse if it is completely cut off from Russian supplies.
Italy could surpass its goal of becoming free of Russian gas by 2025.
Germany's target of reducing its dependency on Russian gas to 10% by 2024 seems ambitious.
Market reaction
The analytics from the global rating giant adds strength to the bearish bias over the EUR/USD. That said, the pair was last seen pressured around 1.0050.
Also read: EU cuts Euro-Area GDP forecast, sees 7.6% inflation, draft shows – Bloomberg
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