Natural gas futures surge as Gazprom announces shutdown. What were nowcasts indicating before this announcement? Nowcasts from Banca d’Italia via CEPR, Cascaldi-Garcia et al., and Woloszko/OECD.

First, natural gas prices for Europe.

Source: TradingEconomics accessed 9/6.

While the surge is not large relative to previous ones, this announcement resolves some uncertainty regarding whether the shutdown would persist. Any forecasts conditioned on re-opening would need to be re-evaluated. (Although the small jump in the price can be taken as meaning an indefinite shutdown had been pretty much priced in already).

On the other hand, the nowcasts rely on data already observed, ahead of the quarterly GDP release, and at a higher frequency.

Figure 1: Top panel, Euro Area 19 GDP in millions Ch.2010Euros, quarterly rate (blue line), nowcast as of 9/2 (red square). Bottom panel, Euro Coin GDP growth, % quarterly rate (blue line), as of 9/5. CEPR defined recession dates shaded gray. Red dashed line at expanded Russian invasion of Ukraine. Source: Banca d’Italia, Cascaldi-Garcia, et al., CEPR, and author’s calculations.

Note that the Q3 nowcast of 9/2 was for 0.1% q/q growth, while the euro coin 9/5 reading was 0.23% (0.4% and 0.9% annualized rate, respectively), both pretty close to zero.

Figure 2: OECD Weekly Tracker for Euro Area (blue), for OECD (tan), both in %, for data thru week ending 8/27. Red dashed line at expanded Russian invasion of Ukraine. Source: Woloszko/OECD. 

The Weekly Tracker reading of 1.6 for the Euro Area is interpretable as a y/y growth rate of 1.6% for the year ending 8/27 (2.4 for OECD as a whole indicates 2.4%).

IMF evaluation of the impact of the shutoff, from three working papers, discussed here.

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