IMF releases its annual assessment of #EuroArea economy

by **Ponee** Mon Jul 14, 2014 11:32 am

Euro Area Policies: 2014 Article IV Consultation-Staff Report; Press Release; and Statement by the Executive Director




Publication Date:	July 14, 2014

Electronic Access:	[url=/external/pubs/ft/scr/2014/cr14198.pdf]Free Full text[/url](PDF file size is 2,504KB). Use the free [url=/adobe]Adobe Acrobat Reader[/url] to view this PDF file

Summary:KEY ISSUES Context. Real output has expanded for four consecutive quarters, and financial market sentiment has improved markedly. But the recovery is weak and uneven. Inflation has been too low for too long, financial markets are still fragmented, and structural gaps persist: these hinder rebalancing and substantial reductions in debt and unemployment. Policies. The economic expansion is grounded in complementary policy actions at both the national and euro area levels, but more is needed to strengthen the recovery: Supporting Demand. Recent ECB actions—including a rate cut, negative deposit rates and policy support for new bank lending to companies—should help address low inflation and financial fragmentation. But if inflation remains too low the ECB should consider a substantial balance sheet expansion, including through asset purchases. The broadly neutral overall fiscal stance is appropriate but any negative growth surprises should not trigger additional consolidation efforts as this would be self-defeating. Mending balance sheets and completing the banking union. Successfully executing the ongoing asset quality review and stress tests should spur balance sheet repair and help reverse fragmentation. Agreement on a single resolution mechanism and bail-in rules comprise important milestones towards banking union, but a common fiscal backstop is still needed. Advancing structural reforms. Alternative sources of funding through securitization, especially to credit-constrained SME’s, should be promoted. A comprehensive strategy, which boosts demand and removes country-specific structural impediments, is needed to tackle high youth unemployment. Competitiveness-enhancing reforms in debtor countries and higher public investment in creditor countries would promote needed rebalancing.

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Series:	Country Report No. 14/198

by **Kevind53** Mon Jul 14, 2014 12:51 pm

WOW! Talk about your mouthful of gobbledygook and double talk! question

IMF releases its annual assessment of #EuroArea economy

IMF releases its annual assessment of #EuroArea economy

Re: IMF releases its annual assessment of #EuroArea economy