Let's recognize it immediately: by reversing the order of the factors, and even considering the different geographical perspective of the analyzes and the latent danger still represented by Covid-19, the result envisaged by both reports does not change and anticipates the socio-economic reality that we will experience in the next months.
Examining the continental area, the financial direction of the EU begins by pointing out that the Ukrainian war presents itself as a source of inflationary pressures and economic decline.
So far, increases in energy and food bills have resulted in inflation, a reduction in households' purchasing power and the need for an increase in interest rates beyond initial forecasts.
Two interdependent factors are added to this scenario: weak American economic growth, but also Chinese growth caused by the anti-Covid restrictions imposed by the Beijing government.
These issues will affect fixed income families in the fall, particularly retirees, office workers, and the retail sector.
It will be then that a reduction in consumption will translate into an equal reduction in production, to which the industry will have to replicate by increasing prices to support fixed costs, while consumers in turn will respond by buying less: here is the recipe for stagflation.
And now, let's translate it all into figures.
The economic development forecasts, the GDP, the traditional index of wealth produced by industry, for EU countries is expected to increase by 2.7% in 2022, and to decrease to a modest 1.5% the following year, with estimates that are almost unchanged also for the eurozone, the group of countries that gravitate towards the euro even though it does not have it as their national currency.
We come to inflation.
In the third quarter of 2022, it will be 8.4% in the euro area, with a forecast of a 3% reduction at the end of 2023, except for the complications due to stagflation that we have briefly summarized earlier.
Let us not be under any illusions, recalls the government of Brussels: the apparent economic prosperity for the current year is the result of a return to normality experienced from the end of 2021 and lasted until the beginning of the Ukrainian war.
For 2023, the EU forecasts forecast an increase in consumption due to the arrival of EU subsidies which, for example, in Italy are known as the National Recovery and Resilience Plan-PNRR.
However, it should be noted that these loans served, and still do, to overcome the difficulties of the pandemic and not of the Ukrainian conflict.
Ultimately, the community analysts observe, all that remains is to hope for a conclusion to the pandemic and the war caused by Russia, and equally to expect families to overcome difficulties by resorting to their savings, even if, and we can guess this by interpreting the prose diplomatic, this will increase the social gap, that is the eternal distance between those who have and those who hope to have.
The analytical perspective changes, but the conclusions of the IMF report remain unchanged, which begins as follows: "the current difficulties will be confirmed in 2023, aggravated by hypotheses of recession".
The roadmap, the roadmap envisaged by the IMF, is divided into three points.
To begin with, everything is legitimate to fight inflation.
And the reasons are all there because, as the Washington experts recall, inflation greatly penalizes the economies of the less industrialized countries.
For example, 75 of the 100 largest central banks monitored by the IMF have raised rates in the past 12 months, and by a total of +1.7 percentage points.
However, this increase is perceived as + 3%, that is double, in the economies of third world countries.
Just to understand, even in this case the old rule is confirmed that if the rich countries catch a cold, the poor ones get sick with the flu.
But still: the increase in rates must be coordinated, predictable and consistent, to avoid destabilizing and uncontrolled capital flight to the detriment of emerging countries.
In these cases, observes the IMF, it would be better to intervene on the foreign exchange market rather than on rates, which allows more room for maneuver.
The masterplan of the Washington experts also foresees that countries with high public debt fight inflation with a tightening of fiscal measures, to be understood as measures to reduce consumption and therefore balance supply and demand; at the same time by granting targeted aid to the weakest social strata and adopting structural initiatives, such as increasing digital efficiency, innovation, and inclusiveness in work processes.
All this always from a budget-neutral perspective, that is, avoiding dangerous increases in a national debt that is added to an out-of-control internal inflation.
To simplify, these are precisely the pathologies that afflict those sovereign debtors who, in order to attract investors, turn to international markets by issuing loans in strong currencies, such as US dollars, but which then fail to pay, causing defaults that penalize investors. international, including those of wealthy nations.
These problems, the IMF warns, already affect 30% of emerging markets and 60% of low-income countries.
Finally, the third solution proposed by Washington economists envisages that the most industrialized nations, the so-called G20, intervene to support international economic cooperation.
It's not an impossible mission, the IMF reminds us: "Let's draw inspiration from the progress made through coordination on taxation, trade, the fight against pandemics, and environmental sustainability."
The first to benefit will be the 71 million people who, according to the United Nations Development Programme , already live in total poverty.
In this context, the IMF recalls that it has already prepared a subsidy plan of 45 billion dollars.
In conclusion, recent history seems to repeat itself, and remind us that, as happened during the pandemic, the socio-economic difficulties caused by the Russian-Ukrainian war must also convince us that global problems must be reacted with equally coordinated initiatives.
