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IMF chief: Harsh winter may cause social unrest in Europe
A harsh winter and an energy crisis may cause social unrest in Europe, the head of the International Monetary Fund (IMF) said Wednesday (Sep 14), according to the Anadolu Agency.
The crisis Europe is struggling to contain could lead to rolling blackouts, shuttered factories and a deep recession.
"There is certainly fear of recession in some countries, or even if it is not recession, that it would feel like recession this winter," Kristalina Georgieva said during an address at Michel Camdessus Central Banking Lecture held in Washington, D.C.
"And if Mother Nature decides not to cooperate, and the winter is actually harsh, that could lead to some social unrest," she said.
Georgieva noted that the global economy had two consecutive shocks -- the coronavirus pandemic and Russia's war on Ukraine that has led to "horrible" economic consequences for those countries and Europe, and caused fears of a recession.
She added that the European Central Bank has to balance its monetary policy to fight inflation while adopting a stance "to keep the economy going."
The IMF in July revised down its growth forecast for the euro area by 0.2 percentage points to 2.6% this year and by 1.1 percentage points to 1.2% next year, because of the war and tighter financial conditions.
The main cause of Europe's energy crisis is that Russia has cut off supplies of cheap natural gas on which the continent has relied for years to power factories, generate electricity and heat homes.
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That has pushed European governments into a desperate scramble for new supplies and for ways to blunt the impact as economic growth slows and household utility bills rise.
The crisis deepened when Russia's state-owned exporter Gazprom said the main pipeline carrying gas to Germany would stay closed, blaming an oil leak and claiming the problems could not be fixed because of sanctions barring many dealings with Russia.
