IMF: Middle East Conflict Impacts European Inflation

The International Monetary Fund (IMF) warns that the conflict between Hamas and Israel could increase inflation in Europe, with a significant impact on energy prices, including a 10% rise in natural gas prices. As of 7 November 2023, Brent and US crude oil prices were lower than their early 2022 peaks. The IMF predicts flat growth in the eurozone for 2023 and a slight recovery in 2024, with Europe's growth slowing to 1.3% in 2023 and improving to 1.5% in 2024. Service-oriented economies are expected to recover more quickly than manufacturing-based ones. Risks highlighted include high energy prices, geo-economic fragmentation, and the nearing end of the monetary policy tightening cycle.