The International Monetary Fund (IMF) provided a report on the eurozone’s conditions and prospects of its development. The economic growth rates of the euro area are predicted to be about 1.6% a year with potential averaging of 1% in the medium term.
The growth forecast for 2015 was confirmed at 1.5%; and for 2016, at 1.7%. The imbalance of the banking sector, low productivity, and chronic lack of demand are the main reasons for such a gloomy forecast.
The IMF expects the potential inflation to remain below the mid-term level of 2% targeted by the European Central Bank (ECB).
The document stresses, “The improving sentiment, rising inflation expectations, and easing credit conditions suggest that the recovery is likely to continue in the near term.”
“Although market reaction to the recent reform package passed in Greece has been broadly positive, further episodes of significant uncertainty and volatility arising from the situation cannot be ruled out. Directors urged policymakers to use all the available instruments, if needed, to manage contagion risks that might originate from Greece,” the report reads.
The IMF came to a conclusion that the eurozone is still very sensitive and that despite some economic improvements in the region, it will still suffer side effects of a protracted period of slow growth.
