A Russian gas cutoff would send Europe into recession unless nations around the world pooled their dwindling supplies together, IMF says

• Europe could crater into a recession without Russian gas deliveries, the IMF warned Tuesday.
• Nations would have to pool scarce supplies and impose price caps to try and avoid major recessions, it added.

A full halt in Russian gas supplies to Europe would spark recessions across the continent unless nations banded together to share liquid natural gas resources, the International Monetary Fund warned Tuesday.

In addition to pooling dwindling supplies, avoiding major recessions would also require European nations to impose artificial price caps, IMF economists said in a blog post.

Roughly 42% of European gas imports come from Russia, and a cutoff would trigger economic contractions of more than 5% over the next year for the Czech Republic, Hungary, Slovakia, and Italy, the IMF said. Under a best-case scenario, the EU's economy would contract by 0.4%, but shrink by more than 2% in a worst-case scenario.

Plus, supply chain bottlenecks and hoarding by individual European nations could exacerbate any gas shortage and result in an even worse energy crunch.

Russia has already stopped gas flows to Germany via the Nord Stream 1 pipeline during its annual maintenance period, which is supposed to end Thursday. But EU leaders don't expect a restart this week, the Wall Street Journal reported.

European leaders have blamed Moscow for weaponizing energy supplies since the war in Ukraine started in February. Moscow has denied the accusations.

The IMF's warning comes after Managing Director Kristalina Georgieva wrote in a blog post last week that the lender plans to cut its global economic growth forecast for later in July. She cited the ongoing war in Ukraine, 41-year-high inflation and the reverberations from COVID-19 lockdowns in China.

"It's going to be a tough 2022 - and even possibly a tougher 2023, with increased risk of recession," she said.