Wednesday

31st Aug 2016

IMF chief: 2013 is make-or-break year for eurozone

  • 'We have to tackle inequality in our societies and promote women,' Lagarde said (Photo: World Economic Forum)

International Monetary Fund (IMF) chief Christine Lagarde has said that eurozone leaders should "keep the momentum" of reforms like the banking union, as recession is now forecast to linger on in 2013.

"2013 will be a make or break year. The biggest risks are in the developed countries - Japan, the eurozone and the US, there are threats if they don't keep up the momentum," Lagarde said on Wednesday (23 January) during her speech at the World Economic Forum in the Swiss resort of Davos.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Earlier that day, the IMF revised its global growth forecast, giving a more pessimistic outlook than three months ago: instead of a 0.1 percent increase in the eurozone this year, the Washington-based lending body now predicts a recession of 0.2 percent.

Lagarde said it was important for the eurozone to have a functional banking union in place as soon as possible, in reference to current negotiations on setting up a single supervisor for banks, to be hosted by the European Central Bank.

"Fiscal consolidation, however painful it may be in some areas of the eurozone, must continue, as well as a clear focus on jobs," Lagarde said.

She repeated what top economists at the IMF admitted in a study earlier this month - that "policy makers did not pay enough attention to inequality" and focused too much on spending cuts at the expense of the most vulnerable in the society.

"What is less clear is how to achieve that inclusive growth. Minimum wages can also work sometimes, but if there is any priority, it should be youth employment," she said.

Over half of young people in Greece and Spain are out of a job, as national economies continue to shrink, the fourth year of recession for Greece and the second for Spain.

Lagarde, a former French finance minister under whose leadership the IMF has become more sympathetic to social woes, criticised the vested interests and corrupt networks in the financial sector, saying they were at the root of the 2008 financial crisis.

"Too much activity was hidden away in shadowy corners. Things have changed, but we need further and better changes in 2013, to finish up the financial sector reform, for instance on shadow banking and derivatives," she noted.

The EU is struggling to strengthen rules for the financial sector, but critics say the new laws have been watered down by lobbying from banks and investment funds.

Stakeholders' Highlights

  1. EBECBright Engineering Students Designed the Future, Today at the BEST Competition
  2. Access NowInternet wins! Net Neutrality Victory in EU
  3. EuridThe 2016 .eu Web Awards is a Chance to Make Dreams Come True so Vote Today !
  4. Nordic CouncilNordic-Baltic Co-operation Vital in Turbulent Times
  5. GoogleBrussels: Home of Beer, Fries, Chocolate and Google’s Policy Team - follow @GoogleBrussels
  6. HuaweiSeeds for the Future Programme to Bring Students to China for ICT Training
  7. EFASpain is Not a Democratic State. EFA Expresses Solidarity to A. Otegi and EH Bildu
  8. UNICEFBoko Haram Violence in Lake Chad Region Leaves Children Displaced and Trapped
  9. HuaweiMaking Cities Smarter and Safer
  10. GoogleHow Google Makes Connections More Secure For Users
  11. EGBAThe EU Court of Justice Applies Proportionality in Assessing Gambling Laws
  12. World VisionThe EU and Member States Must Not Use Overseas Aid for Promoting EU Interests

Latest News

  1. Verheugen went off-script in VW cheat testimony
  2. Poland may remove constitutional judges
  3. Spain's Rajoy faces uphill battle to win MPs' support
  4. Russia and Turkey restart talks on EU gas pipeline
  5. MEPs call for reconciliation with Turkey
  6. Egypt blames EU-Turkey deal for refugee spike
  7. EU dithering aggravated refugee crisis, Merkel says
  8. Verheugen did not think VW cheating was morally possible