Alfred Kammer, Director of the IMF’s European Department held a press conference to address questions about Europe’s economy, including the fallout following the launch of Russia’s war on Ukraine.
Alfred Kammer, Director of European Department, IMF said that the IMF would wait to see the UK’s re-calibrated fiscal policy before assessing the situation further.
“We understand that the UK authorities are in the process of recalibrating the fiscal package they have announced and we wait until we get the details and at that point in time we are going to assess the package. I should also say that the UK is a country with strong institutions. We welcome the government's commitment to involve the Office of the Budget Responsibility and that report will continue to do what is needed to address market dysfunction and preserve financial stability,” said Kammer.
Alfred Kammer, Director of European Department, IMF addressed the risk of rationing in Europe due to the energy crisis caused by Russia’s war on Ukraine.
“We are on a knife's edge. It looks like most countries actually will be able to avoid rationing and so it can be taken care of with a price mechanism. The issue is still a risk because if the winter is cold and that is combined with the Russian gas shut off, some countries may still experience rationing despite having filled refill storage tanks over the summer,” said Kammer.
On Russia, Alfred Kammer, Director of European Department, IMF explained that the current outlook is negative with the country on the brink of a deep recession, and negative growth for the next year at least.
“Growth in Russia this year and next year is going to be negative and combined. Over those two years, GDP levels will be lower by ten percentage points than pre-war. So that is a deep recession Russia has entered. When you're looking at the global outlook and also the European outlook, we see a lower growth. But we are not seeing deep recessions like in Russia. I should, of course, add that the Russia's invasion of Ukraine caused the higher energy prices,” said Kammer.
Alfred Kammer, Director of European Department, IMF advised Turkish policy makers to increase interest rates and tighten monetary and fiscal policy in order to improve the economic outlook for Turkey.
“It is important to implement a tighter monetary policy and that means to increase interest rates. And coupled with that, again, is what we are seeing, that macroeconomic policies need to be aligned. And that means given also limited fiscal space. Fiscal policy in Turkey needs to be tightened in order to support taking care of bringing down inflation,” said Kammer.
Alfred Kammer, Director of European Department, IMF highlighted the positive gains being made in Spain, and suggested that Spain would not experience a technical or outright recession.
“Some other countries will experience technical recession and some will have outright recession. So Spain will not experience that and Spain's growth will actually be stronger than in other European countries,” said Kammer.
Full briefing Here.