WASHINGTON: The US could benefit from a recession in Europe, which could come as a result of a reduction in Russian gas supplies, but will suffer if Moscow refuses to export oil, Xinhua quoted The Washington Post report citing sources.
The impact on the United States from a European recession would probably be “modest and manageable”, since trade with Europe accounts for less than 1 per cent of the US GDP (gross domestic product), a senior administration official, who spoke on the condition of anonymity, told the newspaper, referring to estimates from the US Treasury Department and Council of Economic Advisers.
“We’re in such a perverse situation here it may actually be positive,“said Dean Baker, an economist and co-founder of the Centre for Economic and Policy Research.
However, the newspaper warned on Sunday that while the US produces enough of its own natural gas and would not be much impacted by a reduction in Russian gas exports, a complete shutdown of Russian oil exports would seriously harm the US economy.
“If Europe plunges into a depression after Russia shuts off energy exports and oil rises to US$150 a barrel - there’s a possible impact to the US there that’s really bad,“ said Matthew J. Slaughter, an economist at Dartmouth College.
Mark Zandi, an economist at Moody’s Analytics, told the newspaper that gasoline prices would go back over the record US$5 a gallon almost overnight if Russia refuses to export oil.
“The economy can’t digest US$5 a gallon — that would be overwhelming,“ Zandi warned.
G7 finance ministers confirmed on September 2 their intention to impose price caps on Russian oil as part of expanded sanctions campaign against the country due to its special operation in Ukraine. The price cap will take effect on Dec 5 for crude oil and on Feb 5, 2023, for refined products coming from Russia. Moscow, in turn, pledged to stop exporting Russian oil to the states that would apply the limits.-Bernama
