COV ID-19 is likely to widen wealth gaps in Europe unless policymakers help end the health crisis globally, support economies until the pandemic is over and invest in making economies greener, the International Monetary Fund (IMF) has said.
In a speech to a European Parliament conference on Monday, IMF Managing Director, Kristalina Georgieva, praised EU governments for putting more than three trillion euros in fiscal support for firms and households, including job-retention schemes that helped more than 54 million workers.
“But the path to recovery is uneven because of the difference in starting positions, economic structure and capacity to respond, causing inequalities to grow both across and within countries,” she said.
She said in the 27-nation EU, countries that are traditional tourist destinations, such as Spain, Greece, and Italy, contracted more than 9per cent in 2020 compared to an average contraction of 6.4 per cent across the bloc.
According to IMF forecasts, by the end of 2022, per capita income for central and eastern Europe would be 3.8 per cent below pre-crisis projections, compared with a shortfall of just 1.3 per cent for advanced EU economies.
Economists have warned that such divergence would make the economic management of the EU, including the monetary policy of the European Central Bank more difficult and would increase the risk of crises down the road.