The Old Continent should limit damage. Europe is expected to experience a “sharp slowdown” in its growth but will avoid recession in 2023, before experiencing an acceleration in 2024, said Friday the director of the European department of the International Monetary Fund (IMF), Alfred Kammer. “The good news is that we didn’t have the dreaded recession this winter with the end of Russian gas supplies. However, we are seeing a sharp slowdown, due to the effects of the Russian invasion of Ukraine and the war,” Kammer told AFP.
“It has increased energy prices, inflation, costs for businesses and reduced the purchasing power of consumers,” he recalled. But, “we have seen decisive actions by the authorities to fight inflation, support the recovery (following the pandemic, editor’s note) and we believe that this will materialize this year and strengthen in 2024”, added Alfred Kammer. In particular, Europe was able to avoid the energy crisis that was predicted for it, certainly thanks to “the climate, which helped a little”, but also “because the authorities reacted”.
Europe “in a better position”
As a result, “less effort will be needed to fill the reserves, which is a good starting point”, noted Mr. Kammer, “it might become more complicated if the economic rebound in China is stronger than expected but overall the Europe is in a better position than it was before”. Still, the situation of the main European economies should be very variable, between Italy and Spain which are holding up rather well, France in the average of the euro zone, and Germany, and, outside the European Union, the United United, which should flirt with recession.
“Germany is more affected than other countries by the energy crisis because its dependence on Russian gas was greater. This caused a drop in growth at the end of last year and it is continuing this year. Adding to this the monetary tightening carried out by the European Central Bank, we expect zero growth or a slight recession,” detailed Mr. Kammer.
The impact of strikes in France
As for France, the impact of the strikes might be felt, if they were to persist: “what we observe from previous episodes is that the impact is 0.1 to 0.2% of GDP (Gross domestic product Editor’s note)”, underlined Alfred Kammer. However, growth in France should be just 0.7% in 2023, according to estimates published Tuesday by the IMF.
(with AFP)
