Overview
- IMF Europe chief Alfred Kammer warned in a new analysis that the EU could edge toward recession if inflation approaches 5%, saying no country is immune.
- He linked rising prices and softer growth to a renewed energy shock tied to the Middle East conflict, which he said is milder than the 2022 surge.
- The IMF now projects EU inflation at 2.8% in 2026, with growth of about 1.1% in the euro area and 1.3% across the EU.
- The fund urged central banks to keep inflation expectations anchored and it expects a cumulative 50‑basis‑point policy‑rate increase by year‑end.
- On budgets, the IMF said high‑debt countries such as France and Italy have little room to widen deficits, urged avoiding price caps, broad subsidies, or fuel‑tax cuts, and noted fully compensating the poorest 40% for higher energy bills would cost about 0.9% of GDP versus the 2.5% many spent in 2022.