"Tariff impact outweighs German recovery" - IMF lowers eurozone forecasts due to trade uncertainties
Higher German spending on infrastructure will boost Europe's economic growth in the coming years, but not enough to outweigh the expected impact from U.S. tariffs, according to the head of the European department at the International Monetary Fund.
The IMF last week lowered its economic outlook for the euro zone, also cutting its estimates for the US, the UK and many Asian countries due to President Donald Trump's volatile tariff policy.
The negative impact of tariffs will be slightly offset by the recent German infrastructure spending bill, which will boost growth in the eurozone over the next two years, according to the Fund.
The approved exemptions from Germany's debt rules have unlocked higher defense spending and enabled the creation of a 500 billion euro fund for infrastructure and climate. The move has been described by economists as a "potential game changer" for the sluggish German economy, the largest in the euro zone.
However, optimism has been shaken by US tariffs, which are expected to reduce global growth and trade flows.
Several policymakers at the European Central Bank said last week that, while the inflation path looked positive, with tariffs potentially further reducing inflation in the bloc, their broader outlook was significantly more uncertain.
The IMF stressed that the ECB should cut interest rates only once more this year, by a quarter of a percentage point, despite upside risks.
The central bank has cut rates seven times since June 2024. Its most recent move in April brought the key rate to 2.25%. “We have a very clear recommendation for the ECB. What we have seen so far is a great success in the efforts to reduce inflation and monetary policy has worked... so we expect to achieve the 2% inflation target in a sustainable manner in the second half of 2025. Our recommendation is that there is room for another 25 basis points cut in the summer, and then the ECB should keep that policy rate at 2%, unless there are potentially large shocks and a recalibration of monetary policy is needed,” said the International Monetary Fund sources.
Poll
Bureaucracy, the "sore" of the German economy - It costs small and medium-sized businesses over 61 billion euros per year
Small and medium-sized enterprises in Germany spend 61 billion euros a year on bureaucracy alone, according to the German development bank KfW. The......
"The Albanian economy will grow 3.2% this year" - WB: Not "affected" by the uncertainty of global trade policies
Albania's economy is projected to grow by 3.2% in 2025 and 3.1% in 2026, despite the uncertainty of global trade policies and the changes taking place in the......
Global wind capacity to hit record in 2024 - China dominates sector, with almost half of global total
The Global Wind Energy Council report showed that new capacity reached a record in 2024 for the second consecutive year, after two years of decline.......
Train travel, compensation for passengers - Costs for Albania, Transport Community: Special laws and bodies are needed
As Albania is developing several railway projects, the Transport Community requires the transposition of European legislation and the establishment of......
State Police, with new vehicles - 450 million lek tender opens for new fleet
The Centralized Purchasing Operator has announced the opening of the tender for the rental of road vehicles for the State Police, divided into two lots:......
How long does it take to sell a property? - BoS: Housing prices, "in the stratosphere". Rents are also increasing
The prices of housing sales, or their rental, have increased significantly in the period July-December 2024. According to the Financial Stability Report of......
Medicinal plants, 300 euros per farmer - 30% of annual production delivered with invoice to collection points
The government will support the cultivation of medicinal plants in the country as an industry that employs thousands of residents of rural areas and has high......
Gold "stops growth" - "Easing" global trade tensions reduces the value of the metal
Gold fell sharply from a record high last week as risk sentiment faded after Donald Trump's dovish tone on China tariffs. While the price decline could......
