Eurozone growth will slow to 1.5% in the next five years: IMF – The Financial

It is expected that economic growth in the Eurozone will slow next year due to the negative impact of the results of the referendum in the UK.

The Fund International Monetary ( IMF ) predicts a growth of 1.6 percent estimated in 2016 at 1.4 percent for 2017 and for the next five years sees a growth of 1.5 percent per year with a rate of inflation barely improving to 1.7 percent.

After completing the Article IV Consultation in the Euro Zone team IMF states that although the It strengthens recovery came with low oil prices, a neutral fiscal stance and accommodative monetary policy; inflation and inflation expectations remain very low and at the same time, downside risks have grown.

Senior side effects of the situation United Kingdom following the vote in favor of leaving the euro zone and the wave of refugees, could contribute to greater uncertainty.

“the medium-term prospects are mediocre, with legacies of the crisis such as high unemployment, high public and private debt, deeply rooted structural weaknesses that weigh on growth prospects and productivity. As a result, growth for the next five years is estimated to be close to 1.5 percent, with the inflation rate reaching only 1.7 percent, “the report said.

partial rise in energy prices will help inflation to rise 0.2 percent this year to 1.1 percent next; however, it will remain below the medium-term goal of the European Central Bank.

more balanced and comprehensive taken collectively Policies are needed to address these risks, helping to drive growth, rebuild engines of growth and strengthen the integration.

structural reforms to improve productivity and reduce macroeconomic imbalances need to be incentivized, warns the team IMF in the report published today.

Also, due to limited fiscal space at the national level it is required expand the centralized fiscal support , but must be accompanied by a framework of stronger governance to ensure that members comply with fiscal and structural rules.

the assessment by the international body says that external demand could weaken potentially increase potential risks, particularly those related to uncertainty about the output of the UK and its new economic relationship with the European Union.

To this an intensification of flow of refugees that could promote additional border controls and undermine the free movement between the single market adds.

i mpact in GDP higher costs for cross-border business could be significant with estimates of between 0.4 and 1.2 percent of GDP, depending on the price impact.

the IMF believes that the accommodative monetary policy is adequate and that the recent measures will help ease financial conditions.

The negative interest rates have been contributing to lower funding costs of banks, increase the value of assets and stimulate bank lending; however, further rate cuts could lead to diminishing returns squeezing interest margins of banks.

They urged banks to accelerate repair their balance sheets as part of a broader strategy to promote industry consolidation.

It also encouraged strong action by the European Central Bank to set targets for banks and reduce impaired assets and consider progress must be made at the junction of the capital markets to diversify funding sources and improve the distribution of private risk