Recession in Germany is unavoidable amid Russia’s war in Ukraine and the energy shortage that has followed, Deutsche Bank CEO Christian Sewing warned Wednesday. But his words of caution stretched beyond the country’s relationship with Russia, noting its dependence on China must also be examined.
“Russia’s war against Ukraine has destroyed a number of certainties on which we build our economic system over the past decades,” Sewing said.
He said the “brakes have been applied to globalization” because of the war, disrupting supply chains and causing energy prices to skyrocket, posing a threat to the economy and surging inflation.
“As a result, we will no longer be able to avert a recession in Germany,” he said.
The doom and gloom message is on repeat in the country and in the entire European Union.
“The worst is yet to come,” Uniper CEO Klaus-Dieter Maubach said Tuesday, days after Russia cut off flows to Europe through Nord Stream 1.
Uniper is Germany’s largest gas importer. Maubach said the wholesale price for gas is 20 times what it was two years ago.
Russian President Vladimir Putin blamed sanctions for the halt to gas flows, saying Wednesday it could start up ‘tomorrow’ if Russia got needed turbines. At the same time, though, he said he’ll cut off energy supplies if Europe imposes price caps, a measure EU Commission President Ursula von der Leyen said the group is considering.
Multiple analysts and energy executives are now saying the strain in Europe’s high prices may last through at least 2025.
Meanwhile, Sewing said he is taking this important lesson away from the crisis with Russia.
“When it comes to dependencies, we also have to face the awkward question of how to deal with China. Its increasing isolation and growing tensions, especially between China and the United States, pose a considerable risk for Germany,” Sewing said.
