Gazprom’s announcement that it will reduce gas supplies to Europe via the Nord Stream I pipeline comes amid previous cuts to the Yamal pipeline and gas infrastructure via Ukraine and the Baltics. The move is a retaliation for the EU’s oil embargo and has resulted in a 65% reduction in overall physical flows to Europe.
In response, EU governments have begun to trigger their contingency plans for gas shortages this winter and will seek to increase gas supply from alternative sources. Gas rationing has thus become highly likely and will drag many European markets into a recession in H2 2022, as authorities prioritize households, essential services, SMEs, and strategically important sectors, such as healthcare.
While these pressures are set to subside in 2023 as the EU increases LNG imports, the economic shock will linger throughout next year as well.
Table of Contents
- Executive Summary
- Scenarios for Europe
- Global Outlook Revisions for 2022-23
- Europe Outlook for 2022-23
- The Russia-Ukraine War
- Europe's Energy Consumption Remains Vulnerable
- Gas Supply to Europe Saw a Drastic Drop in June 2022
- Cuts to Gas Supply to Europe will be Permanent
- Gas Storage Levels Have Seen a Steady Increase
- Increase in Coal Imports Will Not Offset Gas Cuts
- Energy Prices Surge Amid Severe Supply Disruptions
- Inflation Will Subside Gradually Only in 2023
- EU Nations Put Forward Contingency Plans
- Rationing Priorities Will Be Uniform Across the EU
- Existing Measures to Protect Households
- Business Implications & Actions to Take
Methodology
The author’s strengths include global management topics and country level analysis tailored for a senior executive audience. The research focuses on cross-industry implications of macroeconomic, geopolitical risk, and emerging trends that impact the strategic decisions of business decisionmakers.
Research analysts:
Almost all have advanced degrees in economics, international affairs, or political science, and are multilingual. Researchers have lived and worked in the markets they cover and are based in regional hubs close to market
- Analysts cover:
- Economic trends and indicators (near-term volatility, long-term forecasts); political developments (election results, post-election policy, regulations, spending, monetary policy), outlook for market demand and cost of doing business, upside and downside scenarios, MNC investment sentiment, business practices
- Quality control:
- Research workflows supported by standard, proprietary process maps, tools and templates for analysis and writing, forecast admin tool, and content management system
- Research managers pressure-test quality, consistency and usefulness of outlooks, scenarios, and suggested actions
- Analyst interactions with clients (>1500/year) provide ongoing feedback loops from on-the-ground operators to c-suite
- Research inputs include:
- Primary: Multinational and local executives (interviews, surveys, analyst consultations), international and local experts (NGO officials, academics, consultants), international and local government officials
- Secondary: Local-language news and international media, public/official data sources, government/association reports, Bloomberg
- Research outputs include:
- Forecast economic data, country/region outlooks and scenarios, market intelligence reports (monthly/quarterly for key countries as well as occasional Market Spotlights), as-needed analyst commentary alerts
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