The scenario of a complete halt to imports of energy raw materials from Russia would strike the Spanish economy with notable force in the first year. A Bank of Spain study titled ‘The economic consequences of hypothetical trade shutdown between Russia and the European Union’ projects a drop in growth of about 1.4 percentage points and a rise in inflation by roughly 1.2 points, a conclusion published shortly after an EU-wide agreement was reached. The aim is to achieve a 90% reduction in purchases of Russian oil and gas by the end of 2022 through a partial and progressive embargo.
A hypothetical disruption to supply, a significant tightening of energy availability, and a rise in production costs are the central concerns the Bank of Spain highlights when outlining the effects of an energy embargo on Russia on Spain’s growth and price levels.
In the central scenario, the bank estimates that a total energy embargo against Russia would shave about 1.1 percentage points off Spanish GDP and add around 0.9 percentage points to inflation. The projections show a possible GDP loss ranging from 0.8 to 1.4 points and an inflation increase between 0.8 and 1.2 points in the first year following the interruption of imports. The severity of the impact will depend on how quickly European economies can replace Russian energy supplies.
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If a complete trade break with Russia extends beyond energy products, the analysis suggests the Spanish economy could experience a 1.8 percentage point reduction in GDP growth, representing an additional drop of about 0.7 points beyond the central energy embargo scenario. Inflation could rise by about 1.4 percentage points, with an extra 0.5 percentage point increase in the first year compared to the central scenario.
The analysis assumes Spain would not be the European country most affected by the cutoff in energy imports from Russia. In any scenario, a notable impact on the Spanish economy is anticipated, driven not only by direct effects but also by indirect consequences from the higher costs and supply constraints faced by Spain’s major trading partners, such as Germany, France, and Italy, through their global production chains. This could lead to more expensive imports, disrupted supply, and lower exports from Spain to these partners.
For the broader European context, the energy embargo is expected to slow growth in several large economies, with Germany facing a decline in GDP growth roughly between 1.9 and 3.4 percentage points, France between 1.2 and 2 points, and Italy between 2.3 and 3.9 points.
sectors
In general, the most affected sectors are those with high energy intensity. The impact is projected to be more muted for service sectors such as transport, basic metals, and chemicals, while heavy energy users bear the brunt.
Within Spain, significant effects are expected in maritime, land, and air transportation, as well as in fishing, basic metals, chemical industries, and electronic equipment manufacturing. Conversely, real estate, education, and financial services are likely to experience relatively smaller disruptions.
Additionally, sectoral spillovers from other countries are anticipated to propagate to Spain. Industries such as vehicle manufacturing or pharmaceutical production, which rely heavily on customers and suppliers located in other EU nations, may see production constraints due to energy restrictions in partner countries.