IMF Director General Christine Lagarde was optimistic, despite a few reservations in terms of the eurozone’s economic situation, when she presented the results of the IMF’s annual review on the eurozone (“Article IV” report) at a Eurogroup meeting on Thursday 15 June.
Lagarde welcomed the stronger recovery that is being seen across the eurozone due to job creation and stronger domestic demand, which the report says is leading to a virtuous circle. She said that this progress would clearly lead the IMF to slightly increase its forecasts for 2017 and 2018.
The IMF’s assessment also welcomes the favourable political environment which, combined with economic recovery, provides an opportunity to deepen eurozone integration. The IMF calls for completion of Banking Union via the creation of a European bank deposits (savings) guarantee scheme, the development of a common capital market and the creation of genuine common budget capability.
The IMF director general noted the medium-term challenges facing the eurozone, such as the convergence of income among the 19 members that has stagnated in recent years, fuelling a feeling of frustration in the middle classes of some countries.
The report also points to greater gaps in competitiveness within the eurozone. Lagarde therefore called once again for budget deficit countries to take advantage of the recovery impulse to deepen the structural reforms they have pledged to implement. For countries with a surplus budget, Lagarde recommends investment stimulation. (Original version in French by Lucas Tripoteau)