IMF expects EU economy to contract by 0.2% this year

The IMF forecasts growth to reach 3.5% this year and a more robust 4.1% next year. However, conditions in the eurozone will remain challenging with the economy expected to contract by 0.2% before posting a modest growth rate of 1% next year, according to the Fund’s latest World Economic Outlook.

Effective policy responses have reduced the acute risks facing the eurozone, Japan and the US.

“If crisis risks do not materialise and financial conditions continue to improve, global growth could even be stronger than forecast. But downside risks remain significant, including prolonged stagnation in the euro area and excessive short-term fiscal tightening in the United States.”