Posted on August 19, 2015 by iMFdirect
By John Bluedorn, Anna Ilyina and Plamen Iossifov
All European Union members, except Denmark and the United Kingdom, are expected under EU treaties to eventually adopt the euro. Six Central and Eastern EU members – Bulgaria, Croatia, Czech Republic, Hungary, Poland and Romania – are yet to do so.
In the meantime, these countries have a decision to make: Should they opt in to the Banking Union before adopting the euro? Such a move may offer greater insurance against shocks, but at a certain cost to policy flexibility. In a recent study, we explore some of the trade-offs that countries need to weigh.
Filed under: Advanced Economies, Economic Crisis, Economic research, Europe, Financial Crisis, Fiscal policy, IMF, International Monetary Fund, Public debt | Tagged: banking union, euro | Leave a comment »
Posted on February 19, 2015 by iMFdirect
By Bergljot Bjørnson Barkbu, S. Pelin Berkmen, and Hanni Schölermann
Investment in the euro area, and particularly private investment, has not recovered since the onset of the global financial crisis.
In fact, the decline in investment has been much more drastic than in other financial crises; and is more in line with the most severe of these crises (see Chart 1). The October 2014 World Economic Outlook showed that many governments cut investment because their finances became strained during the crisis. In addition, housing investment collapsed in some countries, reflecting a natural scaling back after an unsustainable boom. But what is holding back private non-residential investment?
Filed under: Advanced Economies, Economic Crisis, Economic research, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Investment, Reform | Tagged: banking union, euro area, France, Germany, Greece, investment, Ireland, Italy, monetary policy, Portugal, Spain, structural reform | Leave a comment »
Posted on April 11, 2014 by iMFdirect
By Reza Moghadam
Economic growth across Europe is slowly picking up, which is good news. But the recovery is still modest and measures to boost economic growth and create jobs are important.
Western Europe: picking up the pace
The recovery projected last October for the euro area has solidified. This is reflected in our revised forecasts—e.g., the 2014 forecast for the euro area is up from 1 percent last October to 1.2 percent now, with important upgrades in countries like Spain. These revisions reflect the stronger data flow on the back of past policy actions, the revival of investor confidence, and the waning drag from fiscal consolidation. The positive impact on program countries is palpable—improving economies, lower spreads, and evidence of market access. We’ve also seen a welcome pick-up in growth in the UK (almost 3 percent is expected for 2014).
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Emerging Markets, Employment, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: banking union, ECB, euro area, inflation, loans, lowflation, macroeconomic policy, recovery, Regional Economic Outlook: Europe, Russia, Spain, Turkey, Ukraine, United Kingdom | 2 Comments »
Posted on October 11, 2013 by iMFdirect
By Nemat Shafik
Europe faces a stark choice: risk stagnation or pursue integration. It can continue to muddle through, and hope that growth in the world economy will eventually pick up enough steam to pull its economy out of the doldrums. Or it can make a decisive push to revitalize its economy and complete the reforms needed to achieve a fully integrated economic and monetary union
Five years into the crisis, recovery in the euro area remains fragile. Important actions at both the national and euro-wide levels have tackled the immediate threats to the single currency. These include the European Central Bank’s announcement in 2012 that it stands ready to undertake outright monetary transactions in secondary sovereign bond markets, the completion of the European Stability Mechanism, which created a financial firewall around the euro area, and efforts to restore the health of public finances and implement structural reforms.
Filed under: Advanced Economies, Economic Crisis, Employment, Europe, Finance, Fiscal policy, growth, International Monetary Fund | Tagged: banking union, euro area, Europe, iMFdirect, Nemat Shafik, public finances, structural reforms | Leave a comment »
Posted on March 5, 2013 by iMFdirect
By Reza Moghadam
Even before the latest euro area GDP numbers and Italian elections cast a shadow over the continent, economists were struggling to reconcile the steady improvement in market sentiment with the more downbeat data on the economy, production, orders, and jobs.
This video looks at this puzzle from a somewhat different perspective than the usual—and still correct—narrative of weak banks and over-indebted public sectors caught in a vicious cycle. More specifically, we examine the role of household and corporate balance sheets in the countries under financial market stress and the implications for policy priorities.
Filed under: International Monetary Fund | Tagged: balance sheets, banking union, corporate debt, demand, Europe, European Central Bank, European Union, fiscal policy, growth, household debt, IMF, iMFdirect, International Monetary Fund, monetary policy | Leave a comment »
Posted on January 23, 2013 by iMFdirect
by Olivier Blanchard
Version in Español and عربي
Optimism is in the air, particularly in financial markets. And some cautious optimism may indeed be justified.
Compared to where we were at the same time last year, acute risks have decreased. The United States has avoided the fiscal cliff, and the euro explosion in Europe did not occur. And uncertainty is lower.
But we should be under no illusion. There remain considerable challenges ahead. And the recovery continues to be slow, indeed much too slow.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Europe, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: banking union, Brazil, capital flows, China, debt, developing economies, emerging economies, euro area, Europe, European Central Bank, financial markets, fiscal cliff, fiscal consolidation, fiscal crisis, fiscal policy, France, Germany, government bonds, government debt and deficits, growth, IMF, iMFdirect, India, inflation, International Monetary Fund, Italy, Japan, Outright Monetary Transactions, Spain, United States, WEO, World Economic Outlook | 5 Comments »