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IMF calls for additional fiscal stimulus for euro zone in 2021-22

BRUSSELS, Apr 14 (Reuters) – Euro zone countries should receive an additional fiscal stimulus of 3% of Gross Domestic Product in 2021-2022 to boost economic growth by 2% of GDP by the end of next year and reduce the negative effects of the pandemic, said the International Monetary Fund.

In its regional outlook for the euro zone, the IMF said the additional fiscal boost could be followed by further consolidation once excess capacity has been reduced.

“Such additional support on the order of 3 percent of GDP during 2021-22 could raise production by about 2 percent by the end of 2022 and more than half the scars in the medium term due to strong effects on the side of the offer, “the IMF said in the report.

“This would have greater benefits for low-income households and fewer side effects than additional monetary stimulus. It would also bring inflation closer to target in many countries and help rebuild the monetary policy space,” he said.

Eurozone countries provided more than € 3 trillion in liquidity schemes and national fiscal stimulus last year to keep their economies going and some, like Italy, are announcing new support measures as the third wave of the pandemic triggers new containment measures across the block.

(By Jan Strupczewski; Edited in Spanish by Juana Casas)

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