IMF says Europe’s re­cov­ery is spilling over to rest of world

Tehran Times - - ECONOMY -

The global econ­omy can thank Europe’s ro­bust growth for the im­prov­ing out­look, ac­cord­ing to the In­ter­na­tional Mon­e­tary Fund.

Fore­cast­ing 2.4 per­cent ex­pan­sion in the re­gion this year, up from 1.7 per­cent in 2016, the Wash­ing­ton-based lender said the brighter prospects ac­counted for the bulk of an up­ward re­vi­sion to its global out­look pub­lished in Oc­to­ber. It also said the dif­fer­ence in growth rates within the 19-na­tion euro area is the low­est in nearly two decades.

“This re­cov­ery in many coun­tries of Europe is now in­creas­ingly so­lid­i­fy­ing and strength­en­ing,” Jorg De­cressin, deputy di­rec­tor of the IMF’s Euro­pean De­part­ment, said at a brief­ing for its Re­gional Eco­nomic Out­look, pub­lished Mon­day.

The re­gion has ben­e­fited from years of un­prece­dented mon­e­tary stim­u­lus that has helped re­duce unem­ploy­ment and bol­ster pri­vate con­sump­tion. But the IMF said that the “sus­tain­abil­ity of the re­bound re­mains in ques­tion” in the long term amid ad­verse de­mo­graphic trends and sub­dued pro­duc­tiv­ity.

For the near term, though, there are “up­side risks,” De­cressin said.

“There could be a stronger re­cov­ery glob­ally, but also a stronger re­cov­ery of do­mes­tic de­mand within Europe, es­pe­cially in those East­ern Euro­pean economies where we are see­ing in­creas­ingly rapid wage growth,” he said.

Read More: Europe’s econ­omy moves to­ward golden decade Al­ready, Europe’s im­proved de­mand is boost­ing world trade. Ac­cord­ing to the IMF, Europe’s con­tri­bu­tion to the growth of global mer­chan­dise im­ports in 2016-17 is sim­i­lar to that of China and the U.S. com­bined. One out­lier is the U.K., where de­mand has slowed af­ter the pound’s de­pre­ci­a­tion lifted in­fla­tion and squeezed real in­comes.

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