The European economy has become better at coping with energy shocks, but that does not mean their consequences have disappeared. Industrial enterprises are the first to suffer from rising energy prices, especially those for which electricity accounts for a significant portion of their expenses. This was reported for RBC by Anastasia Levchenko, Researcher at the Gaidar Institute’s Industrial Organization and Infrastructure Economics Department.
According to the expert, the service sector and households are better able to adapt to sharp changes in energy prices. Industry, however, remains much more vulnerable: rising electricity costs increase companies’ expenses and make it harder to compete with manufacturers from other countries.
At the same time, the indicators relied upon by the European Central Bank do not always allow for a complete assessment of the region’s energy dependence. For example, oil consumption per unit of GDP reflects neither the economy’s overall energy intensity nor its dependence on foreign supplies. Meanwhile, Europe remains a net importer of energy resources, meaning it imports more than it exports.
“The economy absorbs shocks better through the service sector and households, but industry—especially energy-intensive sectors—remains sensitive to energy shocks,” noted Anastasia Levchenko.
Electricity prices illustrate the difference in the situation between European companies and their foreign competitors. According to data from the International Energy Agency cited by the expert, industrial consumers in the European Union pay more than twice as much for electricity as in the United States, and about 50% more than in China.
According to Anastasia Levchenko, adapting to energy shocks has not spared Europe from their economic consequences. High electricity prices continue to drive up costs for industrial enterprises and weaken their competitive position in the global market.