The International Monetary Fund (IMF) improved the growth outlook for the eurozone economy to 3.1% this year, but cut next year’s to 0.5%, forecasting a recession in Germany and Italy, it was released. this Tuesday.
In the update of the world economic forecasts, released this Tuesday, the IMF forecasts that the growth of the euro zone will slow down from 5.2% in 2021 to 3.1%, which still represents an improvement of 0.5 percentage points. (pp.) compared to the forecasts published in July, due to higher-than-expected growth in the second quarter in most of the bloc’s economies.
However, for next year he is more pessimistic, estimating an expansion of the Gross Domestic Product (GDP) of 0.5%, minus 0.7 pp. than previously anticipated.
The institution notes that the slowdown in growth in single currency countries is less pronounced than in the United States in 2022, but is expected to deepen in 2023.
Even so, he points out that the eurozone average “hides heterogeneity between countries”, and gives as an example that in Italy and Spain there has been a recovery of services related to tourism and industrial production in the first half of 2022. contributing at the projected growth rate of 3.2% and 4.3%, respectively, in 2022.
However, it warns, growth in both countries is expected to slow sharply in 2023, with Spain growing 1.2% and Italy posting a -0.2% contraction.
For Germany, the IMF forecasts 1.5% growth this year and a 0.3% recession in 2023.
The IMF explains that the lower growth in the eurozone reflects the effects of the war in Ukraine, particularly in the economies most exposed to Russian gas cuts, but also the impact of the changes in the monetary policy of the European Central Bank (ECB). , with increases in interest rates
“Russia’s invasion of Ukraine continues to destabilize the global economy. In addition to senseless escalation and destruction of lives and livelihoods, it has led to a severe energy crisis in Europe that is dramatically increasing the cost of living and hampering economic activity. economic”. she points out.
The IMF notes that gas prices in Europe have more than quadrupled since 2021, with Russia cutting deliveries to less than 20% of 2021 levels, raising the prospect of power shortages next winter and more there.
It also notes that the conflict has also pushed up food prices on world markets, despite the recent easing following the Black Sea grain deal, causing hardship for low-income families around the world.
This Tuesday, the IMF maintained its global growth outlook for this year at 3.2%, but cut it by 0.2 pp. compared to July, next year at 2.7%.
Source: TSF
