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Europe

Domestic Expansion Running into External Turbulence

International Monetary Fund
IMF, 2018
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Editorial Rating

7

Qualities

  • Analytical
  • Overview
  • For Experts

Recommendation

The pace of growth in Europe’s advanced economies decelerated in 2018, a trend expected to continue into 2019, according to this detailed IMF analysis intended for economists and policy experts. A more hostile trade environment, the prospect of a failed Brexit deal, costlier energy, more volatile emerging markets and slowing global demand are some of the headwinds the region is battling. Against this backdrop of lower but still solid economic activity, the IMF advises that the time is right for officials to take measures to shore up their economic defenses.

Summary

Expanding domestic economic activity in Europe, mainly in the developed countries, slowed its pace in the first six months of 2018. Future-looking indicators show growth decelerating from 2.8% in 2017 to 2.3% in 2018 and 1.9% in 2019. External factors are acting as a drag on forward momentum: The impacts of US-imposed tariffs on aluminum and steel, though initially muted, could become significant. Rising fuel and commodity prices have boosted inflation and reduced disposable incomes. Demand for European exports has leveled off. The business cycle has passed its apex, ...

About the Author

The International Monetary Fund advises member nations on policy issues and works to promote economic stability and well-being.

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