Ahead of the bloc’s leaders’ meeting in Brussels on Monday, Italy expressed its fears that a cut in Russian gas supply could prove devastating for its economy at a time when division over the Russian oil embargo within the European Union is quite evident.
A report published by Confindustria, the association representing Italian industries, on Saturday estimated that Italy’s GDP could suffer a 2% drop if it stops Russian gas purchases in June.
Russia has been Italy’s main energy supplier in recent years and accounts for 40% of its needs.
The Ukraine war, according to the report, is seriously complicating Italian growth forecasts for the second quarter of 2022 with experts warning that the Italian economy, which has already weakened its financial system due to the pandemic, could suffer a serious hit in case of a possible shutdown of natural gas imports from Russia.
Rome has been seeking to find alternatives to Russian energy since the beginning of the war in Ukraine, reinforcing its energy partnership with Algeria with deals to increase LNG exports and accelerate the gas fields and green hydrogen development in Algeria.
Even if alternative sources of energy supply became gradually available by next winter as a result of the various agreements and projects that the country has already started, if gas imports from Russia are halted in June the projected a 2% drop in GDP will happen as analysis’ calculation show based on 2021 monthly gas consumption as a baseline.
The Confindustria report added that such a strong effect could cause an additional increase in energy costs as well as a major shortage of gas volumes for the Italian industry and services.
Meanwhile, as the EU is speeding up its efforts to end its dependence on Russian fossil fuels, Finland, Bulgaria, and Poland – after refusing to pay Gazprom in roubles – have already cut their gas ties with Russia.
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