The International Monetary Fund (IMF) warns of the risk of stagnation in Europe's economy by taking urgent measures to overcome slowing growth, weak investments and growing geopolitical threats. This will be discussed in the relevant statement of the institution.
Regarding prospects and risks, the eurozone economy is experiencing increasingly difficult global conditions associated with higher tariffs, increased trade policy uncertainty and geopolitical risks.
In its April report, the IMF predicted the growth of the eurozone economy in 2025 by only 0.8% yoy and by 1.2% in 2026.
The IMF has called on European authorities to take urgent measures to support economic growth, investment and productivity. The foundation calls the deepening of the EU single market a key instrument.
According to the fund's estimates, the cost of internal barriers between EU countries is equivalent to a 44% duty on goods and a 110% tariff on services. Eliminating them by unifying regulatory requirements, reforming the capital market, and improving labor mobility will increase the bloc's GDP by about 3% over 10 years.
In addition, the IMF points to the need for additional policy actions at the national level. The successful implementation of internal structural reforms (labor market, human capital, fiscal issues, credit markets, etc.) will lead to significant GDP growth of about 5.7% for the EU in the medium term.
Further diversification of Europe's economic ties, the fund notes, can help strengthen the sustainability of supply chains and gain efficiency gains from trade. Any new industrial policy must be limited to clearly defined market disruptions and coordinated at the EU level.
The Fund sees risks of a deteriorating business environment for companies investing in the United States, which could negatively affect banks' balance sheets. However, now, he called the European banking system "adequately capitalized and liquid."
