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IMF revises Europe's GDP growth for 2023 upwards

Economy Materials 31 January 2023 15:59 (UTC +04:00)
IMF revises Europe's GDP growth for 2023 upwards
Maryana Ahmadova
Maryana Ahmadova
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BAKU, Azerbaijan, January 31. Growth in the euro area is projected to bottom out at 0.7 percent in 2023 before rising to 1.6 percent in 2024, Trend reports via the latest updated on the World Economic Outlook (WEO) from the International Monetary Fund (IMF).

According to the report, Europe’s GDP growth in 2022 was more robust than expected in the face of a significant negative trade shock caused by the war in Ukraine.

"The 0.2 percentage point upward revision to the forecast for 2023 reflects the effects of faster rate hikes by the European Central Bank and eroding real incomes, offset by the carryover from the 2022 outturn, lower wholesale energy prices, and additional announcements of fiscal purchasing power support in the form of energy price controls and cash transfers," the IMF said.

This resilience, which is evident in the third quarter consumption and investment data, partly reflects government support of about 1.2 percent of EU GDP (net budget expenditure) to households and firms affected by the energy crisis, as well as the dynamism of economic recovery.

"Gas prices have declined by more than expected amid higher non-Russian pipeline and liquefied natural gas flows, compression of demand for gas, and a warmer-than-usual winter. However, the boost from reopening appears to be fading. High-frequency indicators for the fourth quarter suggest that the manufacturing and services sectors are contracting," the report added.

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