Europe's Post-Pandemic Economic Challenges

Summary

• Europe has met the COVID-19 pandemic with audacity and imagination and is enjoying a strong but bumpy economic recovery.
• It now faces two policy challenges: controlling inflation and dialing back fiscal support.
• We project that fiscal deficits of key advanced European economies will decline by around 4 percentage points of GDP in 2022, a far larger pivot than the one that followed the global financial crisis.

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By Alfred Kammer, Director of the European Department, IMF

Getting fiscal policy right will be harder than dealing with inflation.

Europe has met the COVID-19 pandemic with audacity and imagination and is enjoying a strong