Page 9 - FSUOGM Week 02 2023

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to reduce demand for Russian gas by two-thirds "Energy markets, in particular those in
before the end of the year, with a mobilisation of Europe, are going through major disruptions as
up to €300bn of investments. The result of all this a result of sanctions due to Russia’s invasion of
is that we are safe for this winter,” said European Ukraine and related spillovers," the World Bank
Commission President Ursula von der Leyen. report says.
“So we are now turning our focus to prepar- "For natural gas and, to a lesser extent, coal,
ing 2023, and the next winter. For this, Europe a cold winter in Europe could cause natural gas
needs to step up its efforts in several fields, from inventories to fall to very low levels, requiring
international outreach to joint purchasing of gas additional refilling in 2023, and Europe could
and scaling up and speeding up renewables, and struggle to refill inventories ahead of the 2023
reducing demand.” winter season," WB experts note.
“The European Union has made significant German industrial activity in November pro-
progress in reducing reliance on Russian natu- vided more evidence that the economy did not
ral gas supplies, but it is not out of the danger fall off a cliff in the fourth quarter but was not
zone yet,” said IEA Executive Director Fatih strong enough to avoid a contraction either
Birol. “Many of the circumstances that allowed “The former growth engine of the German
EU countries to fill their storage sites ahead of economy is stuttering and improvement is not
this winter may well not be repeated in 2023. The really in sight. Despite the recent return of opti-
IEA’s new analysis shows that a stronger push on mism as illustrated by improving sentiment
energy efficiency, renewables, heat pumps and indicators, the sharp drop in new orders, the
simple energy saving actions is vital to head off inventory build-up in recent months, the lagged
the risk of shortages and further vicious price impact of high energy prices and potential sup-
spikes next year.” ply chain frictions as a result of China’s Covid
policies all bode ill for the short-term outlook,”
Germany is screwed Carsten Brzeski the Global Head of Macro at
The energy market in Europe is facing major dis- ING said in a note.
ruptions due to sanctions imposed against Rus- most of Germany's most important indica-
sia, in particular, in Europe it may be difficult to tors are down.
replenish gas reserves ahead of the next winter Median global headline inflation exceeded
season. This is according to the January 2023 9% in the second half of the year, its highest level
Global Economic Prospects report the World since 1995.
Bank released on Tuesday. Inflation rose in almost all countries in 2022

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