Deutsche Bank CEO warns of economic fallout from war
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Mr Christian Sewing said he expects the European Central Bank to raise interest rates in the second half of the year.
PHOTO: AFP
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FRANKFURT (BLOOMBERG)- The full economic consequences of Russia's invasion of Ukraine will only be felt later this year, warned Mr Christian Sewing, the chief executive officer of Deutsche Bank in an interview with German newspaper Welt am Sonntag.
"Many side effects of this war will only become apparent in the second half of the year," Mr Sewing said when asked if a recession looms if the war continues for longer. "Consumption will fall, inflation will rise anyway and may remain above 5 per cent for longer."
Supply will also be tight due to disrupted supply chains, he added.
Mr Sewing said he expects the European Central Bank to raise interest rates in the second half of the year. "In the end, our economy is not likely to grow by 4 per cent or 5 per cent as originally assumed, but by 2 per cent to 3 per cent. In our base scenario, I don't expect a recession yet."
Mr Sewing also said: "We should let the current sanctions unfold their effects. They do enormous harm to the Russian economy. We see this in the Russian financial market, which is down."
And while they may have negative effects on us, "we have to keep this up."
"We have to set sanctions so that they hurt Russia more than they hurt us."
Shutting down the Nord Stream 1 gas pipeline would soon lead to major energy supply problems and significantly higher prices in Germany.
As long as energy imports from Russia are still possible, the German economy should hold up well. If the latest nuclear power plants are really as safe as some say, Germany should "at least examine" them instead of "ruling out nuclear energy".
