Europe’s energy woes are another drag on U.S. growth

that the worst-case scenario — a complete cutoff of Russian gas — could shave more than 2% off the EU’s gross domestic product.

Some countries would be worse off than others: Hungary, the Slovak Republic and the Czech Republic could see GDP impacts of up to 6%, the IMF estimates.hasn't happened — yet. But analysts at Goldman Sachs already forecast heightened odds of an EU economic downturn, including a full-on recession in Germany, due to the deteriorating outlook for Russian gas supply.

"A sustained decline in these vital energy inputs would significantly weigh on European manufacturing production, particularly for energy-intensive industries like chemicals, machinery, and food and beverages," Goldman wrote in a recent research note. "The spike in home heating costs will weigh on European consumption, as higher inflation crowds out consumer purchases of non-energy goods and services," the analysts wrote.Goldman sees a risk of a substantial spillover into the stateside economy since 28% of U.S. exports find their way to Europe — representing 3% of U.S. GDP.

And the growing possibility of a real energy crunch later this year may be felt way beyond its borders.

Source: Energy Industry News (energyindustrynews.net)

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