Increasing output in most European nations will boost economic growth across the globe, according to the latest regional forecast from the International Monetary Fund (IMF) on Monday.

IMF forecast strong growth for Europe

The report forecasts 2.4 per cent expansion across the continent as a whole this year – up from 1.7 per cent in 2016 – with the eurozone enjoying 2.1 per cent growth and many of the 19 nations in the monetary union seeing improvements in previously poor rates of expansion.“This recovery in many countries of Europe is now increasingly solidifying and strengthening,” said Jorg Decressin, deputy director of the IMF’s European Department.“There could be a stronger recovery globally, but also a stronger recovery of domestic demand within Europe, especially in those Eastern European economies where we are seeing increasingly rapid wage growth.”According to the IMF, Europe’s contribution to the growth of global merchandise imports in 2016-17 was similar to that of China and the US combined.“The European recovery is spilling over to the rest of the world, contributing significantly to global growth,” said the IMF. “In a few advanced and many emerging economies, unemployment rates have returned to pre-crisis levels. Most emerging market European economies are now seeing robust wage growth.”

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Stimulus programmes still important suggests IMF

Despite the optimistic outlook, the IMF warned against central banks withdrawing existing stimulus programmes too quickly. “For the euro area and most of advanced Europe, subdued underlying inflation points to the need for monetary policy to remain accommodative for an extended period,” it said.Other long-term risks were seen as weak productivity growth and outstanding bad loans. The report added, “Ageing populations, spreading protectionism, geopolitical tensions and export loss because of a downturn in China, all add to the risks threatening long-term growth.”

Brexit uncertainties holding back UK says IMF

The IMF noted that economies with high public debt – including the UK, Belgium, France, Italy, Portugal and Spain – needed to reduce their debt load “without jeopardising the economic uptick”, and called on Germany, the Netherlands and Sweden to lift growth through higher public investment in infrastructure, housing and the integration of immigrants.The report also identified the UK as one of a handful of European nations where the economic outlook had failed to improve recently, mainly because of the uncertainties surrounding Brexit.“There could be protracted policy and economic uncertainty on a broad range of issues for both the European Union and the United Kingdom, because of the complex and drawn-out process and compressed timeframe for negotiations on the post-Brexit economic relationship.“If the United Kingdom leaves the European Union without an agreement, there will be a notable increase in trade barriers, potentially accompanied by disruption of services in various sectors, with significant negative impact on economic activity.”The IMF has forecast that GDP in Britain will expand by 1.7 per cent this year, slowing to 1.5 per cent in 2018.For related news and features, visit our Enterprise section.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory  

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