The European economy is facing serious "short-term" risks due to the changes in Covid-19 and the delay in the vaccination campaign, said the IMF on Wednesday, which recommends continuing the budgetary effort in 2021 and 2022.
"Reflecting the waves of infection and the pace of vaccinations, the economic recovery in Europe is still hesitant and uneven", summarized Alfred Kammer, director of the Europe department of the International Monetary Fund during a press conference, following the publication. of the regional report.
The IMF expects growth of 4.5% this year in Europe, 0.2 percentage point lower than in previous forecasts in October.
But European GDP growth will not return to its pre-pandemic level before 2022 and provided that vaccines "are widely available in the summer of 2021 and throughout 2022," Kammer stressed, noting the great uncertainty surrounding these forecasts.
Accelerating the production and distribution of vaccines "is the most critical challenge at this stage" and "policy makers must continue to provide emergency aid to support households and businesses," said the Washington institution.
- "Targeted and temporary" -
However, "this is not a call to increase spending permanently (...) but a well-targeted and temporary boost", commented Alfred Kammer.
The IMF insists that it is a question of giving a boost to the recovery through "green" investments allowing sustainable growth that respects the environment.
"When it comes to restructuring the economy, we don't know how long it's going to take," admitted Alfred Kammer.
"What we do know is that budget support must continue in 2021 and 2022".
Regarding the recovery plan for the European Union, he judged that it was "sufficient at this stage", provided that it is actually implemented.
For the moment, the countries of the EU have not yet all ratified the European recovery fund of 750 billion euros, financed by an unprecedented common debt and laboriously negotiated last summer.
German justice threatens to block this instrument because of doubts about its legality.
The IMF has calculated that additional support, representing 3% of GDP over 2021−22, could increase GDP by around 2% by the end of 2022. In the medium term, the effects of the crisis would be reduced "by more than half, ”he explained.
In other words, the faster the recovery, the less lasting the effects of the crisis will be.
The Fund is particularly worried about the possibility that people who lost their jobs during the pandemic will not find them in the future.
"This is possible insofar as the gaps observed in the education and training of workers will never be filled, because deferred investments remain in abeyance or because resources remain allocated to shrinking sectors rather than falling back. move to expanding sectors, ”explained Alfred Kammer.
The IMF official also stressed that it was difficult to know to what extent consumption would support growth when countries, such as France, had to resolve to take new restrictive measures preventing the population from spending their money. savings when dining or traveling.
"Governments must therefore stand ready to provide targeted aid when and if necessary," he concluded.
© 2021 AFP