IMF: Eurozone inflation will remain high for a long time

The International Monetary Fund (IMF) reported that the growth rate in the Eurozone economy is expected to increase gradually throughout 2023 and 2024.

In the statement made by the IMF, it was stated that the 4th article consultation on the Euro Zone economy was completed.

The Eurozone economy has shown remarkable resilience, thanks to the rapid policy response and strong recovery in intensive contact services after Russia’s war in Ukraine and decades of major trade shock.

“Looking to the future, growth is expected to recover gradually over 2023 and 2024, supported by the recovery in real incomes, further reduction in supply constraints and stronger foreign demand in the context of continued tight labor market conditions, even as financial conditions continue to tighten.” evaluation was made.

In the IMF statement, it was noted that the Euro Zone economy is expected to grow by 0.9 percent this year, 1.5 percent next year, 1.8 percent in 2025, 1.7 percent in 2026, 1.4 percent in 2027 and 1.3 percent in 2028.

Core inflation has become permanent

In the statement, it was stated that while headline inflation dropped sharply recently after reaching record highs, core inflation has become more permanent.

“Uncertainty in financial markets, including distress elsewhere, could lead to a contraction in credit and a broader increase in risk aversion, while weak external demand could negatively impact the bloc’s growth prospects,” the statement said. expressions were used.

In the statement, it was noted that more persistent inflation, including due to strong wage growth, will suppress domestic demand and require a tighter policy stance for a longer period of time.

Pointing out that the new supply shocks that may arise from the escalation of the war in Ukraine and the consequent increase in commodity prices or the further intensification of geoeconomic disintegration may also increase inflation and harm growth, it was stated that the economy may prove to be more resilient than expected, especially at a time when there is still a large excess savings stock.

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