Eurozone: Maximum loss of 8.6% GDP due to the war in Ukraine – Natixis

What is the maximum loss of growth due to the war in Ukraine that can be expected for the eurozone? Economists at Natixis attempt to estimate this worst-case scenario.

The three components of the worst-case scenario for the euro zone

“The eurozone would incur the maximum cost of the war in Ukraine if: The rise in energy and agri-food prices is fully borne by households without any government support. This would amount to a cost of 1.7% GDP; Imports of Russian oil and natural gas are stopped. This would amount to a cost of 5.9% GDP, taking into account potential energy savings; Production in a number of industries (automotive, tyres, metallurgy, etc.) is reduced due to difficulties sourcing raw materials and components. This would amount to a cost of around 1%f GDP.”

“Altogether, the maximum loss of GDP for the eurozone would be 8.6%. Of course, this figure will never be reached: governments will help households; alternative producers of oil, natural gas and metals will be found.”