IMF Improves Eurozone Forecast, but Warns of Inflation and Protectionism
The International Monetary Fund (IMF) has slightly raised its estimate for GDP growth in the euro area in 2024, citing the good performance of the services sector and domestic consumption driven by wage increases. However, the IMF warns of risks such as inflation and protectionism.
The organization states that global disinflation is slowing, indicating obstacles along the way. It also highlights the threat of a new protectionist outbreak fueled by this year's super-electoral cycle.
While the growth forecast for Spain remains unchanged at 2.4%, expectations for the eurozone and China improve, but deteriorate slightly for the US and Japan. The IMF emphasizes the need to address inflation, which is being slowed down by services inflation and higher commodity prices.
It warns that trade tensions and political uncertainty could lead to higher interest rates and cross-border spillover effects. The IMF recommends cautious monetary policies and fiscal adjustments for economies facing inflation risks, while urging progress in the fiscal adjustment process for economies experiencing easing prices.
The organization advises countries to revitalize medium-term growth prospects by boosting labor supply and reducing inward-looking trade policies. It also calls for reducing the use of trade-distorting measures and strengthening the multilateral trading system.
Germany and the UK face challenges such as industrial weakness and service sector inflation respectively, while Mexico and Argentina experience growth forecast reductions due to inflation and lower demand.
The press radar on this topic:
UK interest rates will stay high unless service sector inflation falls, says IMF
IMF Refreshes Forecast: German Economy Is Not a Growth Champion - n-tv.de
Der IWF verbessert seine Prognose für den Euroraum, warnt aber vor Inflation und Protektionismus
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