In the statement made by the International Monetary Fund (IMF), it was noted that core inflation has become more permanent, and it is expected that inflation will decrease further but remain high for a longer period as tight financial conditions limit demand and supply shocks pass.
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, the tight labor market that persists even as financial conditions continue to tighten,” the statement said. Growth is expected to recover gradually throughout 2023 and 2024, supported by the recovery in real incomes, further reduction of supply constraints and stronger external demand. assessment was made.
In the IMF statement, the Eurozone economy will 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. growth is expected.
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.
Emphasizing that new supply shocks that may arise from the escalation of the war in Ukraine and the consequent rise in commodity prices or the further intensification of geoeconomic divergence may also increase inflation and harm growth, the economy may prove to be more resilient than expected, especially at a time when there is still a large excess savings stock. expressed.