Global Economic Outlook – September 2022 An important trigger for future development is the lingering Several central and eastern European countries are taking problem of Russian gas dependency throughout the CEE. action in order to cut reliance on Russian gas or coal, Even though the situation throughout central and eastern including the Czech Republic. The energy company ČEZ and Europe proves to be heterogenous, the dependency on the Czech state have secured storage capacity in a liquefied Russian gas is high for the majority of countries. Poland, natural gas (LNG) terminal in the Netherlands that enables Bulgaria, Slovakia, Slovenia and Hungary are particularly reducing dependence on Russian gas by roughly one-third. reliant, since more than 80% of gas consumption is sourced Following the outbreak of the war, Poland banned the import from Russia. A more prolonged interruption of gas deliveries of Russian coal, cutting off the main source of domestic could nullify any near-term economic growth, leading coal supply with few substitutes available on the market. As to a recessionary outlook and a significant increase of a result, the price of coal skyrocketed from an average of inflation rates. just under PLN1,000 per tonne to more than PLN3,000 per tonne. This contributed to a GDP contraction of 2.3% in Q2 2022 from the previous quarter, raising the likelihood of a Chart 49: Gas dependency, CEE recession in 2022. Set against that, Turkey as well as Hungary are refusing to Serbia agree and support the EU sanctions on Russia. Turkey is Bulgaria supplied with more than a third of its natural gas by Russia Czech Republic and at the end of August it came to the agreement of a Slovakia partial rouble payment system for gas. Hungary, which is Slovenia about 85% dependent on Russian gas, has lobbied hard Hungary to secure an exemption from EU sanctions on Russian Croatia crude oil imports and is the only EU member state to Poland have categorically ruled out acting on a plan to cut gas Ukraine consumption by 15% from August 2022 until March 2023. Romania 0% 20% 40% 60% 80% 100% Share of gas in final energy consumption, %, 2020 Dr. Stefan Fink Share of Russia in overall gas imports, %, 2021 Chief Economist, KPMG in Austria Source: Bruegel based on Entso-G and Eurostat. © 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 50