Page 4 - bne magazine February 2024_20240206

4 I Companies & Markets bne February 2024
The boomerang effect of the Russian sanctions on the EU member states is having a mixed impact. Germany, France and Italy are worst hit, but even those doing better are facing litle more than stagnation in 2024, says ING. / CC: bne IntelliNews
Russian sanctions boomerang effect means a year of stagnation for Europe in 2024
Ben Aris in Berlin
The boomerang effect of the Russian sanctions on the EU member states is having a mixed impact. Germany, France and Italy are worst affected as the pain from the changes in energy and input supplies impact their economies, dragging them down into recession, while the less dependent on Russia like Spain and Portugal are already showing signs of recovery, according to ING analysis.
Overall Europe is headed for a year of stagnation that could
be worse than in 2023. By contrast Russia reported growth of 3.5%, according to the preliminary results. And on January 18, an ebullient Russian President Vladimir Putin said that growth could come in at over 4% after revisions. The Russian Ministry of Finance (MinFin) also revised its GDP growth outlook for 2024 up to 3.5%, much improved from the earlier Central Bank of Russia (CBR) forecasts of around 2% for this year.
Currently, sanctions seem to be doing more harm to Europe than they are to Russia.
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Germany: Farmers’ protests, train strikes and disappointing macro data from the first weeks of the new year did not wash away a disappointing 2023, in which the economy contracted by 0.3% y/y. “In fact, it looks like the German economy has entered another challenging year of stagnation and political turbulence,” ING said in a note.
The German economy in a nutshell
Source: Thomson Reuters, all forecasts ING estimates