The IMF lowers European economic growth forecasts, warns of energy shortages

The International Monetary Fund has expressed its pessimism on the situation of the European economies of quest’year and next year, signaling a still very high decline in growth and inflation with the risk of facing an energy shortage that could exacerbate tale situation.

“The European outlook has diminished in significantly, ”the fund said in its regional outlook released on Sunday.

On 11 October, the IMF presented its global economic forecasts during the annual meetings organized by the World Bank in Washington, then released the regional reports.

In this regional report, the Fund explained that “Europe was emerging from the epidemic at the end of 2021 with a set of appropriate policies globally, while high inflation was about to decrease”, but “the Russian war in Ukraine and its repercussions have completely changed these perspectives. “

Growth on the European continent, excluding Turkey and the countries in conflict, is expected to reach 3.2% in 2022 and 0.6% next year, respectively by 0.7 and 1.1 points in less than expected in the previous forecasts published in July.

As for inflation, a slowdown is expected in 2023, but will remain very high, in as the International Monetary Fund expected it to reach 6.2% in advanced European economies and 11.8% in emerging European economies.

The picture looks bleak, with the IMF warning that “one of the most significant short-term risks is the disruption of energy supplies, which, coupled with a cold winter, could lead to gas shortages, rationing and greater economic hardship” .

The IMF said that “social tensions could escalate in response to the cost of living crisis “, pushing governments to” a more expansionary fiscal policy that could force central banks to further strengthen their monetary policy “.

The International Monetary Fund noted that “faced with a combination of weak growth and high inflation that could get worse, European policy makers face difficult policy choices.”

He warned that “a technical recession – at least two consecutive quarters of negative GDP growth – is expected in some parts of Europe could transform in a deeper recession in the whole continent “.

Globally, the International Monetary Fund kept the growth forecast in 2022 at 3.2% and lowered the forecast for 2023 to 2.7%.

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