Sunday

25th Jun 2017

IMF: eurozone economy dragging down global growth

The euro zone is set to grow five times slower than the US this year, according to new projections from the International Monetary Fund (IMF) in their latest economic report - released yesterday in Dubai.

Whilst the US economy, with expected growth of 3.2 percent this year, is dragging the World economy out of its present slump, the euro zone, with a sluggish 0.5 percent growth projection this year, is dragging it back down.

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Moreover, recovery in the 12-country zone is expected to be slower than expected. Presenting the report, the IMF's Chief Economist, Ken Rogoff, said, "for the moment, most Europeans who want to see an economic recovery will have to watch it on TV".

Despite the general weakness in the eurozone's economy, however, "the worst may now be over", according to the report. But any signs of a turnaround in the zone's economic futures are "tentative".

Germany to blame

In the same way the euro zone is blamed for dragging down the world economy, Germany is blamed for weakness within the euro zone.

The report says, "The German economy remains weak for the third year in a row, adding to the sub-par performance of the euro area as a whole and threatening to hold back the region’s recovery prospects".

Germany is the only major industrialised country in the world for which the IMF predicts zero growth, although France is also set to experience low growth this year. The Netherlands and Italy are already in technical recession.

Once again, the IMF calls on the EU to implement reforms, saying, "structural reforms remain key to improving the euro area's economic performance".

British Chancellor Gordon Brown also echoed these calls yesterday (Thursday, 18 September).

Writing in the Wall Street Journal, Mr Brown said that reform of Europe's economy is of an "urgent necessity" and says that the credibility of the EU is at stake.

"Having created a single market in theory, we should make it work in reality - and help it spread competition, cut prices, increase consumer choice and deliver higher productivity", said the Chancellor.

IMF: euro zone should embark on structural reforms

The International Monetary Fund has blamed Germany, Italy and France for not adhering to the euro zone fiscal rules, because they failed to reduce their structural deficits when there was an economic boom.

Row between EU ministers halts e-book tax rate

A bill to reduce VAT rates on e-books and e-publications has become the latest victim of a row between the Czech Republic and its partners over its own plan to collect VAT.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Italy reaches EU deal on failing bank

After months of negotiations, the European Commission and Italy agreed on the terms of rescue for Monte dei Paschi di Siena bank, including job cuts, salary caps and private sector involvement in the bailout.

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