31. oktoobril 2022 toimus Eesti Panga avatud seminar, kus Rahvusvahelise Valuutafondi esindaja Romain A. Duval tutvustas IMFi Euroopa osakonnas vastvalminud regionaalset majandusväljavaadet.

1. IMF | European Department - Regional Economic Outlook 1
IMF Regional
Economic Outlook for
Europe
OCTOBER 31, 2022
Romain Duval
Assistant Director
IMF, European Department

2. 2
IMF | European Department - Regional Economic Outlook
Forces

3. IMF | European Department - Regional Economic Outlook 3
-9
-8
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Tightening AEs Tightening EMs
Easing AEs Easing EMs
Sep-22
0
500
1000
1500
2000
2500
3000
3500
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nord Stream Ukraine Gas Transit
Yamal Turkstream
0
1
2
3
4
5
6
2022 2023 2022 2023
USA China
WEO April 2022 projections
WEO July 2022 projections
WEO October 2022 projections
The outlook is dominated by the fallout from the war in Ukraine,
softening global growth, and a synchronized monetary policy tightening
Projected GDP Growth: US and China
(Percent)
G20: Monetary Policy
(Number of changes in policy rates)
Source: Bloomberg Finance L.P.; Bruegel; IMF, World Economic Outlook; Haver Analytics and IMF Staff calculations
Notes: In the right panel, for years prior to Jan. 2008, May 2010, Jan. 2016, and Feb. 2016, MEX, TUR, JPN, and ARG are not included, respectively.
European Union: Russian Natural Gas Imports
(By Route, million cubic meters/week)

4. IMF | European Department - Regional Economic Outlook 4
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
120,000
1 6 11 16 21 26 31 36 41 46 51
Weeks
2021 2022 Minimum
Maximum Average
-100
0
100
200
300
400
500
600
Jan-19 Jan-20 Jan-21 Jan-22
EA 4 + UK Electricity day ahead
Netherlands TTF Natural Gas day ahead
Sep-22
Europe: Electricity and Natural Gas Prices
(Select countries; annual change over 3-month moving averages, percent)
With energy security under threat, uncertainty remains elevated, and
electricity and gas prices very high …
European Union: Natural Gas Storage
(Million cubic meters/day)
Source: Bloomberg Finance L.P.; Bruegel; Haver Analytics; IMF staff calculations.
Notes: In the left panel, average, minimum and maximum values are calculated from the period 2015 – 2020. In the right panel, latest data point is September 27, 2022; EA 4 include DEU, ESP, FRA,
ITA.

5. IMF | European Department - Regional Economic Outlook 5
Sources: European Commission; Statistical Office of European Communities; Haver Analytics; IMF, World Economic Outlook; and IMF staff calculations.
Notes: In the middle panel, Emerging Economies includes BGR, HRV, HUN, MKD, POL, ROU, and SRB.
-5
0
5
10
15
20
25
2019Q4
2020Q1
2020Q2
2020Q3
2020Q4
2021Q1
2021Q2
2021Q3
2021Q4
2022Q1
2022Q2
Energy excl. gas & electricity
Gas & electricity
Food
Durables
Others
Headline
Europe: Factors contributing to Inflation
(Annualized SA QoQ change, in percent)
Euro Area Emerging Economies
… feeding into broader and more entrenched price pressures, despite
energy price-reducing measures…
-4
-2
0
2
4
6
8
10
12
2019Q4
2020Q1
2020Q2
2020Q3
2020Q4
2021Q1
2021Q2
2021Q3
2021Q4
2022Q1
2022Q2
Energy excl. gas & electricity
Gas & electricity
Food
Durables
Others
Headline
Headline inflation, Price Controls and Tax
Measures (Percentage points, y-o-y; 2019Q4-22Q4)

6. IMF | European Department - Regional Economic Outlook 6
… though high inflation and tight labor markets have yet to translate
into higher wage growth in most advanced European economies
100
101
102
103
104
105
106
107
108
109
110
111
2016Q1 2017Q3 2019Q1 2020Q3 2022Q1
Real negotiated wage
Real compensation per employee
2022Q2
70
75
80
85
90
95
100
105
2019Q4 2020Q3 2021Q2 2022Q1
EU27
Germany
France
Italy
Spain
Hungary
Bulgaria
Romania
Croatia
United Kingdom
2022Q2
30
40
50
60
70
80
90
100
110
120
130
140
150
160
170
180
2019Q4 2020Q2 2020Q4 2021Q2 2021Q4 2022Q2
AE excl. CESEE
AE CESEE
EA
Select EE
Europe: Hours Worked
(Select countries; Index; 2019:Q4=100)
Labor Market Tightness Indicators
(Indices, Q4:2019=100; Select Countries)
Euro Area: Negotiated Wages and Compensation
Per Employee
(index 2015=100, in real terms)
Sources: Eurostat; European Central Bank; Haver Analytics; and IMF staff calculations.
Notes: In the left panel, labor tightness is measured by the ratio of vacancies over the number of unemployed; GBR is included in the figure until 2020:Q3; select EE includes BGR, HRV, HUN, MKD, POL,
ROU. In the right panel, real values are calculated by deflating nominal values using the Harmonized Index of Consumer Prices.

7. IMF | European Department - Regional Economic Outlook 7
0
10
20
30
40
50
60
70
80
-30
-25
-20
-15
-10
-5
0
Jan-20
Jun-20
Nov-20
Apr-21
Sep-21
Feb-22
Jul-22
Unemployment expectations in next 12 months
(rhs)
Major purchases in next 12 months
Sep-22
0
2
4
6
8
10
12
14
16
18
20
HUN
FRA
SVN
ESP
FIN
PRT
SWE
LUX
HRV
SVK
DEU
IRL
AUT
POL
BGR
CYP
ROU
LTU
BEL
GRC
LTV
GBR
CZE
DNK
ITA
NLD
EST
Direct effect
Indirect effect
50
100
150
200
250
300
350
400
450
500
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2018Q1
2018Q3
2019Q1
2019Q3
2020Q1
2020Q3
2021Q1
2021Q3
2022Q1
2022Q3
Savings (rhs)
Income
Expenditure
Projections
2022Q4
Lower real incomes, together with lower savings, are weakening the
consumption outlook
Survey on Consumption and Unemployment
(Percentage balance)
Euro Area: Household Savings and
Expenditure
(Euro billion)
Households’ Burden of Higher Energy Prices
(Average; in percent of household consumption)
Sources: Bloomberg Finance L.P.; Eurostat; Haver Analytics; and IMF staff calculations.
Notes: In the left panel, the direct effect is the increase in household cost of living due to increases in energy prices themselves, and the indirect effect is the increase in the cost of living due to the increase in
prices of other goods.

8. IMF | European Department - Regional Economic Outlook 8
2021
2022
2023
2021
2022
2023
-5
-4
-3
-2
-1
0
1
-1.5 -1.0 -0.5 0.0 0.5 1.0
Monetary
Impulse
(Percentage
point)
Output Gap (Percent)
AE EE
2021
2022
2023
2021
2022
2023
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
-1.5 -1.0 -0.5 0.0 0.5 1.0
Fiscal
Impulse
(Percentage
point)
Output Gap (Percent)
AE EE
Europe: Fiscal Policy Changes
(change in primary fiscal deficit excluding grants)
Sources: IMF, World Economic Outlook and IMF staff calculations.
Notes: In both panels, the changes in Fiscal and Monetary policies have been inversed to show positive values as expansionary and negative values as contractionary. In the left panel, fiscal impulse is the
change in the cyclically adjusted primary deficit excluding grants; AE excludes NOR and EE includes BIH, BGR, HRV, HUN, POL, and ROU. In the right panel, monetary impulse is the change in the either the
deposit rates or treasury-bill rates; EE includes BIH, HRV, HUN, MDA, POL.
Europe: Monetary Policy Changes
(change in nominal short-term interest rates)
Expansionary Expansionary
Contractionary
Contractionary
Policies are broadly expected to tighten in 2023, though fiscal
policy stances are shifting rapidly amid the energy crisis

9. IMF | European Department - Regional Economic Outlook 9
2021 2021
WEO vintages
WEO
Current
WEO
Current
Diff. since
Jul. 2022
WEO
Current
Diff. since
Jul. 2022
WEO
Current
WEO
Current
Diff. since
Jul. 2022
WEO
Current
Diff. since
Jul. 2022
Europe 6.0 2.6 0.7 0.6 -0.5 4.8 15.1 0.8 10.6 1.8
Advanced Europe 5.6 3.2 0.4 0.6 -0.7 2.5 8.3 1.0 6.2 2.1
Euro area 5.2 3.1 0.5 0.5 -0.7 2.6 8.3 1.0 5.7 1.8
Emerging Europe 6.8 1.2 1.3 0.5 -0.1 9.7 30.6 0.3 20.7 1.2
Emerging Europe excl.
Belarus, Russia,
Türkiye, and Ukraine
6.4 4.3 0.3 1.7 -1.1 4.7 13.3 1.6 11.8 3.0
Year
Real GDP Growth CPI Inflation (average of the year)
2022 2023 2022 2023
Overall, Europe’s growth is expected to be weaker,
and inflation to be higher and more persistent in 2023
Sources: IMF, World Economic Outlook; and IMF staff calculations.
Notes: Projections are updated as of September 26, 2022.

10. 10
IMF | European Department - Regional Economic Outlook
Risks

11. IMF | European Department - Regional Economic Outlook 11
Uncertainty is very high, and the balance of risks remains heavily to the
downside on geopolitical tensions and inflation persistence
De-anchored inflation leads to sharper-
monetary policy tightening
Abrupt global slowdown or recession in
China and (or) the US
Downside
risks
Upside
risks
Lower inflation persistence allows for
a faster soft landing
Outbreaks of lethal and highly
contagious COVID-19 variants
The cost-of-living crisis leads to
increased social tensions
Larger-than-expected trade, financial,
and commodity prices’ disruptions
Fast unwinding of supply disruptions
War escalates and (or) other
geopolitical tensions increase
Full and persistent interruption of
Russian gas supplies to Europe
More resilient than expected
Household Consumption

12. IMF | European Department - Regional Economic Outlook 12
-7%
-15% -15%
-40%
-3%
-8%
-10%
-30%
-6%
-13%
-13%
-34%
-45%
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
Europe DEU, AUT ITA CZE, SVK,
HUN
July 2022 estimates
With higher reserves as of Sept 11
With 'cold winter' (plus higher reserves)
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
ITA
NLD
ESP
BGR
HUN
SVK
CZE
LTU
DEU
POL
EST
ROU
AUT
LVA
SVN
FRA
ESP
ITA
NLD
CZE
DEU
FRA
AUT
ROU
SVK
EST
POL
BGR
LVA
LTU
HUN
SVN
Supply side Households
Electricity
Natural Gas
Europe: Demand Compression in a Full
Russian Gas Shutoff
(percent of annual consumption)
A full Russian gas shutoff remains a key risk this winter, but other risks
abound—including weaker external demand
Sources: Bruegel; Eurostat; European Commission; IMF, World Economic Outlook and IMF staff calculations.
Notes: The left panel estimates the natural gas compression needed for to clear the market under alternative demand assumptions. The middle panel measures the ex-ante impact of a 50pp
across the board increase in electricity and gas prices with respect those in 2022:Q1.
Europe: Ex Ante Impact of additional
energy price increases
(percent of 2019 GDP)

13. IMF | European Department - Regional Economic Outlook 13
Even without any worsening of the energy crisis, inflation
could stay higher than expected for longer…
Core inflation in Emerging
European economies (Percent)
Sources: Eurostat, Haver Analytics, World Economic Outlook, IMF staff calculations.
Note: Contributions are based on dynamic simulations of country-by-country regressions. Group aggregates are simple averages across countries.
-5
0
5
10
2019 2020 2021 2022
Residual
Energy price
Food price
External price pressure
Unemployment gap
Expected inflation
Core inflation in Advanced
European economies (Percent)
-5
0
5
10
2019 2020 2021 2022
Residual
Energy price
Food price
External price pressure
Unemployment gap
Expected inflation

14. IMF | European Department - Regional Economic Outlook 14
…although the projected easing of supply bottlenecks should
help bring inflation down
Sources: Eurostat, Haver Analytics, World Economic Outlook, IMF staff calculations.
Note: Contributions are based on dynamic simulations of country-by-country regressions. Group aggregates are simple averages across countries.
Firms reporting labor shortages
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
0 10 20 30 40 50
Residual
Labor shortages
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0 20 40 60 80
Residual
Input shortages
Firms reporting input shortages

15. IMF | European Department - Regional Economic Outlook 15
Inflation could become even more persistent in the event of
an adverse wage-price feedback loop …
• A price-wage spiral can be triggered if prices seep into wages; higher wages feed back into higher prices
• Greater risk of wage-price spirals when (1) inflation is high and (2) monetary policy framework is weak
Inflation Wages -3
-2
-1
0
1
2
3
4
5
6
0 1 2 3 4 5 6 7 8 9 10
High inflation regime
Low inflation regime
-6
-4
-2
0
2
4
6
0 1 2 3 4 5 6 7 8 9 10
High central bank independence
Low central bank independence
0.0
0.2
0.4
0.6
0.8
1.0
1.2
0 1 2 3 4 5 6 7 8 9 10
High inflation regime
Low inflation regime
0.0
0.4
0.8
1.2
1.6
0 1 2 3 4 5 6 7 8 9 10
Better anchored inflation expectations
Poorly anchored inflation expectations
Prices to wages
Wages to prices
Source: IMF staff calculations.

16. IMF | European Department - Regional Economic Outlook 16
…which would call for more aggressive monetary policy
tightening, as would a de-anchoring of expectations
Sources: IMF staff calculations.
Notes: Illustrative DSGE model simulations for an average emerging European economy and central bank. All results are shown in deviation from baseline. Increased
inflation persistence = inflation formation becomes as backward-looking as it waws prior to the 1990s. De-anchoring of expectations = one percentage point increase in
future expected inflation. 2% more slack = 2 percentage point rise in the output gap used by the central bank to conduct monetary policy. For details, see online appendix
to October 2022 IMF Regional Economic Outlook for Europe.
0.3 0.4
-0.2
1.0
1.0
-0.8
-0.4
-0.5
-1.0
0.9 0.9
-1.0
2.1
2.1
-1.9
-0.2 -0.3 -0.3
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
Inflation Policy rate GDP Inflation Policy rate GDP Inflation Policy rate GDP
Increased inflation persistence De-anchoring of expectations Demand slowdown
Illustrative Inflation Risk Scenarios: Emerging European Economies
On impact 4 quarters after the shock

17. 17
IMF | European Department - Regional Economic Outlook
Policies

18. IMF | European Department - Regional Economic Outlook 18
-20
-10
0
10
20
30
40
TUR EA HUN ISR HRV POL UKR CHE GBR ALB
Dec. 2021 - Aug. 2022
Dec. 2020 - Dec. 2021
Feb. 2020 - Dec. 2020
Total
Inflation Gaps and Policy Rates
(Percentage points)
Balance Sheet Expansion by Central Banks
(Percent of 2020 GDP; select countries)
Continued policy rate hikes are needed to preempt these inflation risks,
but central banks should remain nimble
Sources: IMF, World Economic Outlook; Eurostat; Central Banks; Haver Analytics; and IMF staff calculations.
Notes: In the left and middle panels, policy rates and inflation gaps are aggregated by taking the PPP-GDP weighted average; inflation gap refers to the difference between the inflation target (or its midpoint)
and the headline and core inflation. In the middle panel Emerging Economies exclude BLR, MDA, RUS, TUR, UKR. In the right panel, expansion is calculated as difference between Central Banks’ asset value;
ISR 2022 balance shows July 2022 value.
Advanced Economies Emerging Economies
-4
-2
0
2
4
6
8
Aug-19
Nov-19
Feb-20
May-20
Aug-20
Nov-20
Feb-21
May-21
Aug-21
Nov-21
Feb-22
May-22
Aug-22
Policy rate
Headline inflation gap
Core inflation gap
-2
0
2
4
6
8
10
12
Aug-19
Nov-19
Feb-20
May-20
Aug-20
Nov-20
Feb-21
May-21
Aug-21
Nov-21
Feb-22
May-22
Aug-22
Policy rate
Headline inflation gap
Core inflation gap

19. IMF | European Department - Regional Economic Outlook 19
0
2
4
6
8
10
12
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
HRV HUN
ROU POL
CZE MDA
SRB
0
5
10
15
20
25
30
35
40
Pass-
through
supression
Targeted
support
to HHs
Untargeted
support
to HHs
Support to
firms
Other
AE EE
Maintaining price signals is key to control fiscal costs and preserve fiscal
consolidation, where fiscal space is limited or demand pressures high
Source: Haver Analytics; Eurostat; OECD; UNHCR; and IMF staff calculations.
Note: In the left panel, EE includes SRB, BGR, TUR, MDA, HUN, POL, ROU, MKD, MNE KOS, BLR. In the middle panel, estimates are based on 2017 OECD figure of EUR 10,000 per refugee in main European
destination countries updated to May 2022 prices (EUR 11,578). Cross-country values are obtained by indexing country nominal GDP per capita to value for Germany, with Luxemburg indexed to Germany, and
Ireland to the UK. Estimates are preliminary. In the right panel, MDA represents 5-year government bond spread.
Europe: Energy Measures
(Percent of total countries in the group)
EU: Estimated Fiscal Cost of Ukrainian Refugees
(In Euros and percent of GDP)
FRA
GRC
MLT
ITA
ESP
HUN
SVN
LUX
NLD
SWE
HRV
ROU
IRL
BEL
PRT
FIN
DNK
AUT
DEU
BGR
CYP
SVK
LVA
LTU
POL EST
CZE
0.0
0.2
0.4
0.6
0.8
1.0
1.2
0 5000 10000 15000 20000
Euro per Refugee
Fiscal
Cost
(percent
of
GDP)
10-year Government Bond Spreads
(vs. German Bunds, percent; Select countries)

20. IMF | European Department - Regional Economic Outlook 20
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2014Q1
2014Q4
2015Q3
2016Q2
2017Q1
2017Q4
2018Q3
2019Q2
2020Q1
2020Q4
2021Q3
2022Q2
Credit availability
External conditions
Funding constraints
Policy stance
Price of risk
FCI first difference
Tightening
The private sector is better prepared for tighter financial conditions, but
pockets of vulnerability should be carefully monitored
Sources: Eurostat; EU-SILC; German Institute for Economic Research (DIW Berlin); Haver Analytics; Orbis; and IMF staff calculations.
Notes: In the middle panel, DSTI refers to the debt service to income ratio; the quintiles refer to the income distribution quintiles; EU-SILC data is used by all countries, except Germany uses German Institute
for Economic Research (DIW Berlin). In the right panel, ICR refers to interest coverage ratio.
Europe: NFCs with ICRs lower than one
(Share of total per country)
Europe: Vulnerable Mortgage Owners
(DSTI>40 percent, Share of total)
Euro Area: Change in Financial Conditions
(Contribution to the QoQ changes, percent)
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
ISL
EST
ITA
LVA
HRV
ESP
GRC
LTU
DEU
GBR
MLT
PRT
AUT
BEL
HUN
IRL
FRA
SVN
CYP
CZE
SWE
SVK
NOR
NLD
POL
CHE
DNK
FIN
BGR
ROU
SRB
1st quintile
3rd quintile
5th quintile
0
0.1
0.2
0.3
0.4
0.5
0.6
AUT
SWE
BGR
ROU
POL
NOR
SVN
CZE
DEU
HUN
FRA
SVK
BEL
PRT
ESP
ITA
FIN
Baseline, large firms
Baseline, SMEs
Adverse, large firms
Adverse, SMEs

21. IMF | European Department - Regional Economic Outlook 21
Structural reforms could reduce supply constraints in energy and labor markets,
easing price pressures down the road—accelerating NGEU implementation
Mitigate short-term energy supply
downside risks
Overcome infrastructure
bottlenecks while reducing GHG
emissions in the medium term
Build gas storage and settle solidarity agreements before a
full gas shut-off begins
Allow prices to work so gas is used more efficiently
Accelerate the rollout of renewables, reduce fossil fuel
consumption in industry and transport
Ramp up smart investment, including on gas connectivity
Further labor and product market reforms
Ease labor market tensions
 Accelerating NGEU implementation can help on some of these fronts, while supporting medium-term growth
Address demographic pressures Increase the size of the labor force by stimulating the
participation rate of women and older workers

22. IMF | European Department - Regional Economic Outlook 22
Key Messages
 Outlook: Growing fallout from the war.
o Technical recessions though not yet deep recessions, high and volatile inflation.
o Very high uncertainty with predominance of downside risks to growth and upside risks to inflation.
 Macroeconomic policy mix under baseline projections: monetary policy normalization, fiscal consolidation broadly appropriate
o Monetary policy.
 Policy rate increases should continue, at faster pace in advanced economies, and tight monetary policy stance likely needed in 2023.
 Comparatively, tighter stance needed in most emerging European economies.
o Fiscal policy.
 Consolidation should proceed, although pace may be slowed for a few months to weather energy crisis.
 Stronger consolidation required in countries with limited fiscal space or facing demand pressures (many emerging European economies).
 Reform EU fiscal framework to help prevent debt distress while allowing for macro stabilization.
o Financial policy.
 Keep macroprudential policy settings broadly unchanged. Closely monitor and stress test banks’ risk exposures to households and firms.
o Structural policies.
 Reforms to mitigate energy security risks and accelerate the green transition, ease labor market tensions, and reduce war-related scars
(including NGEU implementation)  will help ease supply constraints and inflationary pressures down the road.
 Macroeconomic policy mix if downside risks materialize: recalibrate, depending on nature of the shock(s)

23. 23
IMF | European Department - Regional Economic Outlook
Thank you