International Monetary Fund. European Dept.
Published: 2024-07-18
Total Pages: 92
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The economy contracted in 2023 due to high energy prices and interest rates. Headline inflation has fallen sharply as end-user energy prices have stabilized, but core inflation remains somewhat stickier, driven by services. Falling inflation and tight labor markets have turned real wage growth positive. High interest rates have boosted bank profitability, but part of this increase is likely temporary. High interest rates have exposed vulnerabilities in banks’ financing of commercial real estate activity.