IMF announces productivity decreasing in majority of EU
Date
11/6/2024 7:31:26 AM
(MENAFN) The European Union's Economy is struggling with slow growth and declining productivity, according to the International Monetary Fund (IMF). The IMF's European Department director, Alfred Kammer, highlighted these concerns in the organization's regional economic outlook for the EU, which projects a modest GDP growth of just 1.1% in 2024, followed by 1.6% in 2025—an improvement from 0.6% in 2023.
Kammer identified three major obstacles holding back the EU's economic potential: fragmented markets that prevent firms from scaling up, capital markets that fail to support young, innovative businesses despite abundant savings, and a lack of skilled labor in key sectors. He suggested that removing barriers to the free movement of goods, services, capital, and labor would help alleviate these challenges.
The IMF report also noted a persistent 30% income gap per capita between the EU and the US, which has remained unchanged for two decades. This disparity is partly due to low productivity in the EU's newer member states in Central, Eastern, and Southeastern Europe. Kammer also pointed out the ongoing economic strain caused by high energy prices following the Russian invasion of Ukraine, particularly in energy-intensive countries like Germany.
Despite efforts to reduce reliance on Russian energy, some EU countries, including Hungary, Austria, Slovakia, the Czech Republic, and Italy, continue to import Russian pipeline gas, which has further hindered the EU's economic recovery. The IMF recently increased its 2024 growth forecast for Russia to 3.6%, signaling a contrast in performance between Russia and the EU.
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