{ "title": "Press Briefing: Europe Regional Economic Outlook", "publication": "IMF News, October 17, 2025", "sourceUrl": "https://www.imf.org/en/news/articles/2025/10/17/tr-10-17-25-press-briefing-transcript-eur-reo", "canonical": "https://www.imf.org/en/news/articles/2025/10/17/tr-10-17-25-press-briefing-transcript-eur-reo", "overlayPath": "/en/news/articles/2025/10/17/tr-10-17-25-press-briefing-transcript-eur-reo/index.md", "summary": "Hi everyone. Welcome to this press conference on the European economic outlook. My name is Camila Perez. I'm with the Communications Department at the IMF.", "publishDate": "2025-10-17", "sections": [ { "heading": "Short-term outlook and growth drivers", "content": "- Pandemic and energy crisis were large shocks; recovery unfolded as expected but the recovery phase is ending and leading into a \"dismal, mediocre\" medium-term growth outlook for Europe.\n- Short-term growth drivers:\n - Higher real wages supporting consumption.\n - Lower interest rates supporting investment spending.\n - Front‑loading of activity in response to tariff threats earlier this year.\n- Trade and geopolitical headwinds:\n - Trade tariffs and uncertainty projected to shave off growth by 0.5 percent cumulatively for 2025-2026.\n - Higher infrastructure spending (Germany) and higher defense spending only partially offset tariff impacts." }, { "heading": "Inflation and monetary policy", "content": "- Euro area disinflation: assessed as \"mission accomplished\" — inflation target has been reached durably.\n - Recommendation: ECB can stay at a terminal rate of 2 percent and should change the policy rate only if material shocks materially change the inflation outlook.\n- CESEE countries:\n - Inflation remains 1 to 3 percentage points above target.\n - Recommendation: CESEE central banks should remain data dependent, meeting by meeting, and ease only gradually to avoid unanchoring expectations." }, { "heading": "Structural reforms and European-level reforms (medium-term)", "content": "- Four priority EU-level reform areas:\n - Reduce intra-European trade barriers.\n - Prepare for deeper capital markets with the capital markets union.\n - Allow labor to move to where high-productivity jobs are (labor mobility).\n - Create an energy union to provide cheaper, less volatile energy.\n- National structural and transformation reforms are also necessary to boost productivity.\n- Quantified gains from reforms:\n - Combined Euro-level reforms (first step) plus national structural reforms would boost the level of GDP by 9 percent over 10 to 15 years.\n - Bundling a set of EU reforms over the next 10 years would provide a boost to the level of GDP of 3 percent.\n - Country-level distribution of gains from the bundling exercise: the country that gains least gets a boost in GDP level of 2 percent; the country that gains most gets an increase in 5 percent.\n- Implementation considerations:\n - Speed up EU decision-making where possible (examples: coalition of the willing; consider majority voting in some areas) and smart sequencing and communication domestically to overcome political economy resistance.\n - Use the European budget to incentivize reform and to finance savings for European public goods: public investments in R&D, energy, and defense." }, { "heading": "Fiscal consolidation and long-term fiscal risks", "content": "- Long-term spending pressures: aging-related health care and pensions, digital transformation, clean energy transitions, and higher interest rates.\n- Simulation outcome if fiscal policies are not adjusted:\n - Debt would double over the next 15 years and increase for the average European country to 130 percent of GDP.\n- Role of reforms in fiscal adjustment:\n - Productivity-enhancing reforms raise incomes and contribute to fiscal consolidation.\n - Structural reforms could lower the fiscal adjustment requirement over the next five years by one-third to one-half of the effort.\n- Policy recommendation: prioritize reform and fiscal consolidation now; \"the long-term starts here and now.\"" }, { "heading": "Ukraine: program discussions, macro outlook, and financing", "content": "- The Ukrainian authorities requested a new IMF program; IMF has begun discussions on the macro framework and structural transformation measures — discussions are progressing but will take time.\n- Financing:\n - IMF emphasizes that financing relies on donors; Ukraine has started discussions with donors to close the financing gap.\n - On the use of immobilized Russian assets: IMF recommends countries considering doing so seek a strong legal underpinning and be aware of implications for the international monetary system.\n- Macroeconomic effects of the war:\n - Growth has been dented, reflecting attacks on energy infrastructure and civilian harm.\n - Ukrainian authorities indicate the war will be lasting during 2026; this assumption is reflected in projections.\n - Current account: projections for 2025 reflect higher imports — both critical war-related imports and higher household imports due to loss of competitiveness.\n - Public debt: Ukraine's public debt is expected to rise above 100 percent of GDP in 2025.\n- Program design priorities:\n - External viability and debt sustainability will be addressed in program discussions.\n - Continued anti-corruption, governance, and institutional reforms; domestic revenue mobilization with durable revenue measures; prepare for reconstruction and EU accession." }, { "heading": "Russia: outlook and constraints", "content": "- Growth downgraded for 2025 and 2026; growth has been significantly slowing since last year.\n- Drivers of slowdown:\n - Weaker domestic demand following prior overheating and policy tightening (monetary and fiscal).\n - Weaker external demand due to lower oil prices and lower export volumes.\n- Medium-term outlook remains very low growth because of sanctions, the war, and restricted technology transfers affecting productivity." }, { "heading": "Country-specific notes and policy advice", "content": "- Italy:\n - Growth near 0.5-0.7 percent between now and 2030 in IMF estimates.\n - Importance of productivity-enhancing reforms (NRRP follow-on reforms, labor market participation, skills, firm dynamics).\n - Fiscal stance: IMF forecasted a headline deficit of 3.3 percent of GDP for this year; Italian authorities report 3.0 percent and IMF will reflect updates when it revises forecasts.\n - Encourage continued fiscal consolidation alongside reforms.\n- Spain:\n - Strong recent performance with \"bumper\" growth around 3 percent in recent years; IMF upgraded Spanish forecasts for this year and next year.\n - Key contributors: exports of services (not only tourism, but IT and communications), employment boom (three-quarters of employment increase came from immigration).\n - Near-term growth expected to remain robust but slow in the medium-term.\n - Policy priorities: productivity-enhancing reforms, active labor market policies, front-load fiscal adjustment to build confidence.\n - Housing: supply-side actions (planning and zoning), increased social housing, and addressing affordability to support labor mobility and growth.\n- United Kingdom:\n - Support for consolidating budget events to once a year; one full appraisal for budget-setting is appropriate.\n - Two suggested areas for improvement: appraisal timing/role of additional forecasts and careful consideration of headroom in the budget.\n - AI: potential large upside for productivity, especially in services-heavy economies like the U.K.; need labor market policies and upskilling to spread benefits.\n- Switzerland:\n - Comparatively modest debt burden and low borrowing costs.\n - Plan for 2025 is modestly expansionary fiscal policy to address remaining slack and deflationary pressure; fiscal space could be used if new adverse shocks emerge.\n- Bulgaria and Eurozone enlargement:\n - Bulgaria expected to grow around 3 percent next year and the year after.\n - Short-term forces: strong domestic demand (euro adoption, lower interest rates), strong fiscal policy, credit developments; wage growth in region is rather exuberant and presses inflation up.\n - Policy priorities for Bulgaria: careful monetary stance under ECB from January, non-expansionary fiscal policies to avoid fueling wage growth, structural reforms to boost long-term convergence.\n - EU-level reforms (single market integration, capital market union) would benefit Bulgaria and CESEE region through stronger investment and productivity.\n- Russia and CESEE regional concerns:\n - Across the CESEE region, watch inflationary pressures and wage growth; fiscal policy should avoid exacerbating pressures and support debt stabilization.\n\nPress Briefing: Europe Regional Economic Outlook, October 17, 2025 — IMF Communications Department\n\n---\n\n\n References\n\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/10/17/tr-10-17-25-press-briefing-transcript-eur-reo" } ], "bullets": [ "[Markdown version](/en/news/articles/2025/10/17/tr-10-17-25-press-briefing-transcript-eur-reo/index.md)", "[Structured JSON version](/en/news/articles/2025/10/17/tr-10-17-25-press-briefing-transcript-eur-reo/index.json)", "[Bundle manifest](/en/news/articles/2025/10/17/tr-10-17-25-press-briefing-transcript-eur-reo/bundle-manifest.json)", "Published: October 17, 2025", "Pandemic and energy crisis were large shocks; recovery unfolded as expected but the recovery phase is ending and leading into a \"dismal, mediocre\" medium-term growth outlook for Europe.", "Short-term growth drivers:", "Trade and geopolitical headwinds:", "Euro area disinflation: assessed as \"mission accomplished\" — inflation target has been reached durably.", "CESEE countries:", "Four priority EU-level reform areas:", "National structural and transformation reforms are also necessary to boost productivity.", "Quantified gains from reforms:", "Implementation considerations:", "Long-term spending pressures: aging-related health care and pensions, digital transformation, clean energy transitions, and higher interest rates.", "Simulation outcome if fiscal policies are not adjusted:", "Role of reforms in fiscal adjustment:", "Policy recommendation: prioritize reform and fiscal consolidation now; \"the long-term starts here and now.\"", "The Ukrainian authorities requested a new IMF program; IMF has begun discussions on the macro framework and structural transformation measures — discussions are progressing but will take time.", "Financing:", "Macroeconomic effects of the war:", "Program design priorities:", "Growth downgraded for 2025 and 2026; growth has been significantly slowing since last year.", "Drivers of slowdown:", "Medium-term outlook remains very low growth because of sanctions, the war, and restricted technology transfers affecting productivity.", "Italy:", "Spain:", "United Kingdom:", "Switzerland:", "Bulgaria and Eurozone enlargement:", "Russia and CESEE regional concerns:", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2025/10/17/tr-10-17-25-press-briefing-transcript-eur-reo/index.md", "json": "/en/news/articles/2025/10/17/tr-10-17-25-press-briefing-transcript-eur-reo/index.json", "bundleManifest": "/en/news/articles/2025/10/17/tr-10-17-25-press-briefing-transcript-eur-reo/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T04:12:52.752Z" }