The IMF has revised its forecast regarding the timeline for the end of the war between Russia and Ukraine.
The International Monetary Fund has updated its projection on the duration of the war in Ukraine. The conflict will negatively impact Europe for at least the entirety of 2025.
This was stated by Alfred Kammer, as reported by RBK-Ukraine referencing the press briefing titled "Prospects for the European Economy" for October 2024.
"When you look at our forecasts for 2025, we have also downgraded them for Ukraine. This reflects the reality that Russia's war in Ukraine will continue. We had anticipated it would end sooner. That is not the case. And this, again, adds to the costs for the Ukrainian economy," he said.
Previously, the IMF had expected the war to conclude by the end of 2024 in its baseline scenario. In October, this timeline was pushed back by a year to the end of 2025.
According to him, growth indicators this year have been severely impacted by the bombardment of Ukraine's energy infrastructure, which also restrains growth and prospects.
"And, of course, as for all of Europe, this creates uncertainty in Ukraine, which dampens overall demand," Kammer added.
The fund representative stated that the IMF's economic team continues to "do a remarkable job in terms of, firstly, maintaining macroeconomic stability" in Ukraine.
"Secondly, supporting the economy to initiate growth and assisting businesses to operate in this environment, while protecting vulnerable individuals affected by the war. And thirdly, laying the groundwork for what we hope will be a swift reconstruction and a medium-term path towards EU accession," he said.
Kammer stated that Russia's war against Ukraine continues to affect Europe's outlook.
"If you look at the growth trajectory, it hasn't changed much over the past year. The main reason for the poor performance in Europe is actually the significant shock to energy prices caused by Russia, which Europe is experiencing," he said.
In particular, Germany has been heavily impacted by the energy price shock, still due to its energy-intensive production. "This is a direct consequence of the Russian war. If you look at the ECB's tightening cycle, it had to be stricter simply because inflation was higher. This is a result of Russia's war in Ukraine," he added.
The IMF has revised its growth forecast for Europe for 2025 downward.
"What we see is some moderation in the recovery we are forecasting. Again, this is a result of the uncertainty created by the surrounding environment and Russia's war in Ukraine,"
He noted that this uncertainty affects consumers, who are questioning what will happen with energy prices and the future. It also creates uncertainty for investors, who are wondering what will happen in the medium term.
"So this is the direct impact we see—the war in Ukraine continues to have repercussions for Europe's economic development," he added.
IMF Forecasts
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