17-Jul-2026 15:10

Executive Board of the International Monetary Fund (IMF) completed the 2026 discussions on common euro area policies with member states. IMF noted that the war in the Middle East has weakened the euro area outlook, with growth projected to slow from 1.4 percent in 2025 to 0.9 percent in 2026 and 1.2 percent in 2027 and headline inflation projected to rise from 2.1 percent in 2025 to 2.9 and 2.3 percent, respectively. Risks are skewed toward weaker growth and higher inflation, with the extent of energy market disruption from the war in the Middle East being the largest source of uncertainty. According to IMF, monetary policy should aim to keep inflation expectations anchored and fiscal policy should mitigate the war's harm to activity while remaining prudent. Structural fiscal consolidation remains a priority, especially in high-debt countries. Reforms should focus on strengthening energy security, deepening the single market, and lifting medium-term growth.

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