A financial shock could be on the cards if there’s a “trade rupture” between Russia and Germany, warned S&P Global’s chief economist on Tuesday.

“Looking at a downside scenario … there’s kind of several different ways to play that but we think the one that would really move the macro needle is some sort of trade rupture between Russia and Europe,” Paul Gruenwald told CNBC’s “Squawk Box Asia.”

“This is not just cutting off the gas — whether Germany stops buying or Russia cuts it off,” he added.

Following Russia’s unprovoked invasion of Ukraine, several world powers including the U.S., Japan and Canada have hit Moscow with sanctions. The European Union is considering whether to ban oil imports from Russia, and has pledged to eventually cut its reliance on Russian gas by two-thirds.

Russia for its part has demanded that so-called “unfriendly” countries pay in rubles for gas, referring to those that have imposed heavy economic sanctions designed to isolate Russia over its unprovoked onslaught in Ukraine.

The European Union receives about 40% of its natural gas from Russian pipelines and about a quarter of that flows through Ukraine. Germany gets roughly half of its natural gas from Russia.

Gruenwald added: “We’ve got the energy complex, we’ve got commodity prices, we’ve got industrial inputs that Europe’s importing, such as nickel and titanium and other things like that.”

Research and consultancy firm Wood Mackenzie also warned that the global economy could undergo “more permanent changes” with global trade possibly altered by the crisis.

“If the Covid-19 pandemic highlighted a need to shorten supply chains, the war in Ukraine underscores the importance to have reliable trading partners,” research director Peter Martin wrote in a Tuesday note.

“These forces could lead to a lasting realignment of global trade. The global economy becomes more regionalised — shorter supply chains with ‘reliable’ partners.”

A trade rupture between Germany and Russia could put a dent in German manufacturing – one of three global manufacturing centers besides the U.S. and China, Gruenwald said.

“That would feed through to … lower GDP, lower employment, lower confidence — and then we would get a kind of a macro financial shock out of that. So that’s the sort of scenario we’re worried about that could move the needle,” he warned.

Trade between Germany and Russia jumped significantly in 2021 compared to the year before, with the value of goods surging 34.1% to 59.8 billion euros ($65 billion), according to Germany’s Federal Statistical Office.

Germany’s imports from Russia rose considerably last year, rising 54.2% compared to 2020. Exports also rose but at a slower pace than imports – rising 15.4%.

The main products that Germany exported to Russia included vehicles, machinery, trailers and chemical products, according to the agency. Russia’s main exports to Germany included crude oil, natural gas, metals and coal.

Russia accounted for 2.3% of total German foreign trade, and was the fourth most important country for German imports outside of the European Union in 2021.