War, severe economic consequences for Europe
For “some of the biggest European economies such as France, Germany, the United Kingdom and Italy“very weak or negative quarterly growth is expected in mid-2022”, according to reports from the IMFunderlining that this “setback of the recovery is hidden in the annual growth forecasts” which are affected by the rebound of 2021. The IMF has forecast a GDP for Italy at + 2.3% this year, +1, 7% next and + 1.3% in 2024. The head of the Department EU of the IMF, Alfred Kammerhe specifies: economies such as “France, Germany, Italy and the GB are expected to barely grow or even contract for two consecutive quarters this year”.
Ukraine: disproportionate weight on Italy due to gas price increases – While higher energy and food prices will affect everywhere, rising natural gas prices in Europe will impact disproportionately in countries with greater dependence on it. Russia (Czech Republic, Germany, Hungary, Italy and the Slovak Republic). This is what we read in IMF Europe Report.
IMF, severe economic consequences for Europe from war – The war in Ukraine “will have severe economic consequences for Europehaving struck when the recovery from the pandemic was still incomplete, “explains the International Monetary Fundunderlining that with the war “new risks have emerged. The most worrying one is a sudden stop in the flow of energy from Russia, which would cause significant losses for many economies”.
Ukraine: IMF, pandemic challenges worsen, gradual response to shock is needed – “Being a supply shock in economic terms, the war exacerbates the political challenges created by the pandemic. A task for politicians is to facilitate a gradual adjustment to these war-triggered shocks, including higher commodity prices and new ones. sources of energy. Fiscal policy is better suited than monetary policy to deal with new shocks “. This is what we read in Regional economic outlook of the International Monetary Fund for L’Europe. “Automatic fiscal stabilizers should be allowed to operate freely, while the additional spending is allocated for humanitarian support to refugees and for transfers to low-income families and vulnerable but viable businesses. With inflation running far above of objectives, monetary policy should stay on course towards normalization. The pace of the withdrawal of monetary stimulus should vary with economic circumstances, proceeding faster where inflation expectations risk being undermined. It is important that policymakers avoid the emergence of wage-price spirals, “adds the report.
Ukraine: IMF, prolonged war would increase refugees to Europe – “A prolonged war would increase the number of refugees fleeing to Europe, exacerbate supply chain bottlenecks, add pressure to inflation and exacerbate production losses. The most worrying risk is a sudden shutdown of the supply chain. energy flows from Russiawhich would lead to significant production losses, particularly for many central and eastern European economies. “This is what is stated in the International Monetary Fund’s Regional Economic Outlook for Europe.
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