IMF: Europe Is Still Ruining Everything For Everybody

Author:
Publish date:
Updated on

Perhaps it would like to do something about that?

The International Monetary Fund trimmed its global growth forecast and urged European policy makers to use “aggressive” monetary policy as a second year of contraction leaves the euro area’s recovery lagging behind the rest of the world.

The global economy will expand 3.3 percent this year, less than the 3.5 percent forecast in January, after 3.2 percent growth in 2012, the Washington-based fund said today, cutting its prediction for this year a fourth consecutive time. The Washington-based IMF sees the 17-country euro area shrinking 0.3 percent, compared with a 0.2 percent retreat in January, with France joining Spain and Italy in contracting.

“The main challenge is still very much in Europe,” IMF Chief Economist Olivier Blanchard said in a recorded statement released with the fund’s World Economic Outlook. “Europe should do everything it can to strengthen private demand. What this means is aggressive monetary policy and what this means is getting the financial system to be stronger -- it’s still not in great shape.”

As central banks in the U.S. and Japan deploy unconventional policies such as asset purchases to rouse demand, pressure is mounting on the European Central Bank to do more. The IMF report describes a “three-speed” recovery led by emerging markets including China, with the U.S. forging ahead and Europe trailing after fighting a debt crisis that has forced bailouts of five countries in the region.

IMF Cuts Global Growth Outlook as Europe Demand Urged [Bloomberg]
IMF trims global growth forecast, sees bumpy recovery [Reuters]

Related

The Eurozone Is Ruining Everything

Here's the latest impressively awful bit of data to emerge from the economic wasteland at the heart of the world's economic slag-heap, Europe: Employment in the eurozone has dropped to a seven-year low.