IMF: Most concerning risk for Europe is stop of energy flows
According to the IMF, the most concerning risk for Europe's economies is the sudden stop of energy supplies from Russia.
The sudden stop of energy supplies from Russia represents the most concerning risk for European economies, according to the IMF.
The IMF said in its regional economic outlook on Friday that a cut in energy supplies would lead to significant output losses in Europe.
“The most concerning risk is a sudden stop of energy flows from Russia, which would lead to significant output losses, for many economies in central and eastern Europe in particular,” the report read.
The International Monetary Fund (IMF) also warned that other new risks have emerged from the conflict in Ukraine and that a "protracted-war" would deepen the refugee crisis, create supply-chain issues, and further feed inflation.
The Fund also projected that if Russian gas supplies are cut within the next 6 months, Europe will have enough capabilities to manage it, but this will nonetheless lead to serious pressures on prices.
“A longer 12-month Russian supply shut-off, lasting through the summer and next winter, would result in an outright gas shortfall during the peak winter months, even at presently elevated prices. Significant additional demand compression would be necessary, and the price required to clear the market would likely be extremely high,” the report said.
In such a scenario, central and eastern Europe would face the most hardships.
It was also projected that GDP growth will decline in advanced European economies to 3% and a decline of 3.2% will be felt by emerging markets.