{
  "title": "Regional Economic Outlook for Europe, October 2022",
  "publication": "Regional Economic Outlook, October 2022",
  "sourceUrl": "https://www.imf.org/en/publications/reo/eu/issues/2022/10/12/regional-economic-outlook-for-europe-october-2022",
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  "summary": "The war in Ukraine is taking a growing toll on Europe’s economies. The worsening energy crisis has depressed households’ purchasing power and raised firms’ costs, only partly offset by new government support.",
  "publishDate": "2022-10-12",
  "sections": [
    {
      "heading": "Overview: conflict, energy, and macroeconomic trade-offs",
      "content": "- The war in Ukraine is taking a growing toll on Europe’s economies.\n- The worsening energy crisis has:\n  - depressed households’ purchasing power, and\n  - raised firms’ costs,\n  - only partly offset by new government support.\n- Central banks in the region and the world are acting more forcefully to bring high and persistent inflation down to targets.\n- Global financial conditions have tightened.\n- European policymakers face severe trade-offs and tough policy choices:\n  - A tightening macroeconomic policy stance is needed to bring down inflation, while helping vulnerable households and viable firms weather the energy crisis.\n  - Policies need to stay nimble and agile and adjust should additional shocks materialize.\n- Europe was on its way to exit the pandemic at the end of 2021, with a broadly appropriate policy mix that supported a handover from public to private sector–led growth, while rising inflation was expected to subside as commodity prices and supply chain disruptions would ease.\n- Russia’s war in Ukraine and its fallout changed this picture completely:\n  - Europe has been hit by a massive terms-of-trade shock that has weakened the growth outlook, further raised the level and persistence of inflation, and led to a cost-of-living crisis that threatens social cohesion.\n  - Risks of medium-term output scarring, which was successfully avoided in the pandemic, are resurfacing.\n- Risks:\n  - Risks to growth are on the downside.\n  - Risks to inflation are on the upside, epitomized by the energy crisis, which fosters unusually high uncertainty and steep policy trade-offs."
    },
    {
      "heading": "Chapter 1 — Inflation in Europe: assessment, risks, and policy implications",
      "content": "- Inflation in Europe has soared to multidecade highs.\n- Drivers and empirical findings:\n  - Soaring commodity prices account for much of the surge in inflation.\n  - Empirical analysis finds that a sizable share of the recent uptick cannot be explained by conventional inflation drivers and points to the role of pandemic- and war-related forces, such as rising shortages in input markets.\n- Prospects:\n  - The prospective stabilization of commodity prices and the projected slowdown in growth should gradually bring inflation down, but the process will likely be slower than previously expected and highly uncertain.\n- Risks and central bank guidance:\n  - Inflation risks are on the upside.\n  - Central banks should thus keep raising policy rates in most European countries while remaining nimble and data-dependent.\n- Fiscal guidance:\n  - Fiscal policies should be focused on weathering the energy price shock without adding to inflation pressures."
    },
    {
      "heading": "Policy implications and recommended stance",
      "content": "- Macroeconomic policy stance:\n  - Tighten policy to bring down inflation.\n  - Simultaneously help vulnerable households and viable firms weather the energy crisis.\n- Operational principles:\n  - Remain nimble and agile.\n  - Be ready to adjust the policy mix should additional shocks materialize.\n\nRegional Economic Outlook — October 2022 (IMF).\n\n---\n\n Content in this bundle\n\n- Microsoft Word - Online annex v8\n  - Microsoft Word - Online annex v8 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Microsoft Word - Online annex v8 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Regional Economic Outlook: Europe -- The Fog of War Clouds the European Outlook\n  - Regional Economic Outlook: Europe -- The Fog of War Clouds the European Outlook (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Regional Economic Outlook: Europe -- The Fog of War Clouds the European Outlook (PDF){rel=\"external\" type=\"application/pdf\"}\n- Regional Economic Outlook: Europe -- The Fog of War Clouds the European Outlook\n  - Regional Economic Outlook: Europe -- The Fog of War Clouds the European Outlook (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Regional Economic Outlook: Europe -- The Fog of War Clouds the European Outlook (PDF){rel=\"external\" type=\"application/pdf\"}\n- Full Report\n  - Full Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Full Report (PDF){rel=\"external\" type=\"application/pdf\"}\n- Executive Summary\n  - Executive Summary (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Executive Summary (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Blog by Alfred Kammer\n- Press Conference\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/publications/reo/eu/issues/2022/10/12/regional-economic-outlook-for-europe-october-2022"
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    "Published: October 12, 2022",
    "The war in Ukraine is taking a growing toll on Europe’s economies.",
    "The worsening energy crisis has:",
    "Central banks in the region and the world are acting more forcefully to bring high and persistent inflation down to targets.",
    "Global financial conditions have tightened.",
    "European policymakers face severe trade-offs and tough policy choices:",
    "Europe was on its way to exit the pandemic at the end of 2021, with a broadly appropriate policy mix that supported a handover from public to private sector–led growth, while rising inflation was expected to subside as commodity prices and supply chain disruptions would ease.",
    "Russia’s war in Ukraine and its fallout changed this picture completely:",
    "Risks:",
    "Inflation in Europe has soared to multidecade highs.",
    "Drivers and empirical findings:",
    "Prospects:",
    "Risks and central bank guidance:",
    "Fiscal guidance:",
    "Macroeconomic policy stance:",
    "Operational principles:",
    "**Microsoft Word - Online annex v8**",
    "**Regional Economic Outlook: Europe -- The Fog of War Clouds the European Outlook**",
    "**Regional Economic Outlook: Europe -- The Fog of War Clouds the European Outlook**",
    "**Full Report**",
    "**Executive Summary**",
    "[Blog by Alfred Kammer](https://www.imf.org/en/Blogs/Articles/2022/10/23/europe-must-address-a-toxic-mix-of-high-inflation-and-flagging-growth)",
    "[Press Conference](https://meetings.imf.org/en/2021/Spring/Videos?videoId=6246864473001)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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