ShareBERLIN: Germany’s gas stocks have fallen to a “worrying” level, an economy ministry spokeswoman said yesterday, as fears over a possible invasion of Ukraine by Russia put further pressure on energy supplies. “Of course we are monitoring the situation of the storage levels and that is certainly worrying,” said the spokeswoman during a regular government press conference.
Stocks were now at 35-36 percent, under the “critical level” of 40 percent which the German government deems is necessary to withstand seven straight days of an extreme cold snap. To overcome a 30-day streak of more moderate cold weather, the storage should be half full. Stocks never slid below 71 percent in 2020, according to data from the industry group Gas Infrastructure Europe. With around 40 percent of gas consumed in Europe coming from Russia, Moscow is suspected of taking advantage of the tensions on the world market to reduce supply and drive up prices. In an interview this week with Die Zeit weekly, EU leader Ursula von der Leyen said that there are “increasingly signs that the Kremlin is using gas deliveries as political leverage.”
Meanwhile, the new head of the Bundesbank said he expected to see inflation in Germany above four percent in 2022, adding pressure on the European Central Bank to tighten its monetary policy in response to soaring prices. “Bundesbank experts currently expect inflation to be well over four percent in 2022,” Joachim Nagel told the German weekly Zeit in an interview.
Inflation increased over the course of 2021 in Germany, finally coming to rest at 3.1 percent for the year. Nagel’s inflation call is above the last official prediction made by the German government, which expects the figure to rise slightly to 3.3 percent in 2022, and above that previously made by his own institution, which had consumer prices rising by 3.6 percent.
The outcome for Europe’s largest economy will have a significant bearing on the eurozone, where inflation unexpectedly rose to 5.1 percent in January, the highest level since records for the currency club began in 1997. The shock figure, published the day before the ECB’s meeting, heaped pressure on the Frankfurt-based institution to follow other central banks in bringing forward rate hikes.
At the meeting, Nagel’s first since taking office at the beginning of the year, ECB policymakers left the “step-by-step” reduction in their bond-buying program untouched. But in her press conference afterwards, ECB President Christine Lagarde failed to repeat her previous assertion that a rate rise was “very unlikely” this year.
Instead, Lagarde said the ECB would not be “rushed” and would take a “data-dependent” approach. The ECB has long kept interest rates at record lows, including a negative deposit rate that charges financial institutions to park their cash with the central bank overnight. “If the picture does not change until March, I will advocate normalizing monetary policy” at the next ECB meeting, Nagel said. “The first step is to end net purchases during 2022,” Nagel said, referring to the ECB’s bond-buying program, its main crisis fighting tool, aimed at keeping borrowing costs low to stoke economic growth.
“Then interest rates could rise already this year,” he added. With his comments, Nagel announced himself as a “hawk” among the 25 members of the governing council, picking up the mantle from his predecessor Jens Weidmann, an arch advocate of tighter monetary policy. “In my estimation, the economic costs will be significantly higher if we act too late than if we act early,” Nagel said.
Trade surplus
Germany’s trade surplus narrowed for the fifth year in a row in 2021, official data showed yesterday as a global supply crunch hampered exports, including in its key auto sector. The trade balance of Europe’s biggest economy showed a surplus of 173.3 billion euros ($197.9 billion) last year, down from 180.4 billion euros in 2020, the federal statistics office Destatis said in a statement.
Germany’s is known for its export-driven economy, with the country usually racking up a trade surplus, where it exports more than the value of its imports. While the industrial nation’s exports of nearly 1.4 trillion euros in 2021 exceeded imports of 1.2 trillion euros, imports grew faster-by 17 percent-than exports which rose by 14 percent, Destatis calculated. In December, the trade surplus was down on a seasonally adjusted basis to 6.8 billion euros from 10.9 billion euros in November. In gross figures, the trade surplus was still down at seven billion euros. — AFP
