The International Monetary Fund warned that Europe’s economy faces multiple risks, with a slowdown in growth, despite the good performance in recent months.
Alfred Kammer, head of the Europe Department at the IMF in Washington, said Europe’s economy had avoided recession this winter and showed resilience, but it now faces the triple challenge of defeating inflation, sustaining recovery, and protecting financial stability.
Kammer added that inflation is still high and recorded more than 10% in most emerging European economies and some developed economies, but the inflation rate is expected to decline due to lower energy prices and improved performance of supply chains, even with the continued rise in consumer prices.
The IMF expects the inflation rate to reach an average of 5.6% in developed countries in Europe during the current year, and 11.7% in emerging economies.
Kammer noted that the banking sector and financial stability as a whole have been tested in recent weeks, raising uncertainty about Europe’s economic growth prospects in the near term.
The IMF expects the economy of industrialized countries in Europe to grow by 0.7% this year, compared to 3.6% last year and 1.4% next year.
Kamer warned that matters may become more complicated, pointing to the risks of labor shortages, high energy prices and an increase in geopolitical problems, which could impede growth and raise the inflation rate.
He added that failure to contain the risks of financial stability could lead to a crisis and a decline in the rate of growth, so it is important to deal seriously with the chaos that the banking sector in the United States and Europe has been exposed to recently, against the background of the collapse of several US regional banks, most notably “Silicon Valley Bank” and “” Signature Bank, and the Swiss Credit Suisse Group defaulted.
