Higher German infrastructure expenditure will increase the economic growth of Europe in the coming years – according to Alfred Kammer, director of the European Department of the International Monetary Fund, it is not enough to predominate the expected drawing of the US tariffs.
The IMF reduced the growth outlook for the euro area last week and, due to President Donald Trump's volatile tariff policy, also exposed to downgrading for the USA, Great Britain and many Asian countries.
The institution lowered its growth forecasts of the euro area for each of the next two years by 0.2 percentage points to 0.8% in 2025 and 1.2% in 2026.
“It is the tariffs and trade voltages that burden the prospects and not the positive effects on the financial side,” Kammer told Carolin Roth from CNBC in an interview with IMF-World Bank Spring Meetings last week.
“We see that we have a meaningful downgrading for Europe Advanced economies … and for the emerging euro countries double in this period of two years.”
The negative effects of tariffs are slightly balanced by the latest infrastructure expenditure law in Germany, which will increase growth in the euro region in these two years, said Kammer.
Exceptions to the long -term debt rules of Germany have activated higher defense spending and enabled infrastructure and climate fund of 500 billion euros (548 billion US dollars). The move was described by economists as a potential “game changer” for the sluggish economy – the largest in the euro zone.
Inflation job almost completed, but the tarrulosities up to date – the members of the European Central Bank said this week
However, the optimism was shaken by US tariffs, which is generally expected to dampen global growth and trade currents.
Several political decision -makers from the European Central Bank announced CNBC last week that the inflation path looked positive – although the tariffs may have further reduced inflation into the block – their broader prospects were now clearly uncertain.
The IMF chamber said that the ECB should only reduce a quarter of the percentage point this year, despite the growth risk.
The ECB has reduced the interest rates in steps of the quarter percent by June 2024. The recent step in April was reduced to 2.25%to 2.25%.
“We have a very clear recommendation for the ECB. What we have seen so far is a great success in disinflation, and monetary policy worked … So we expect that in the second half of 2025 we will reach the inflation target of 2%,” Kammer told CNBC.
“Our recommendation is that there is space for a further reduction in 25 basis points in summer. Afterwards, the ECB should claim the policies of 2%, unless the important shocks exist, and there is a need for a new calibration of monetary policy,” he added.
The prices for the index of the index of the index of the index on Monday referred to the market expectations for two further quarter -point cuts this year.
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