EUROPE(Credit: Monacoshots) Europe has successfully navigated through a tumultuous period - Russia's invasion of Ukraine, a large energy shock, and the emergence of a more divided global economy - and a soft landing has now come within reach, said the IMF’s Alfred Kammer in a speech at the European Central Bank House of the Euro in Brussels, Belgium. Europe's recovery, fueled by domestic demand, is firmly on track, he noted. However, this “puts the spotlight on what may be Europe’s more fundamental problem: to sustain the recovery and lift its still miserable-looking medium-term growth outlook,” Kammer said. Europe’s critical weakness is low productivity, Kammer noted. “The way to higher growth may lead through the Single Market,” he said, citing a recent IMF study that finds that reducing remaining barriers to the Single Market for goods and services by 10 percent could raise European output by as much as 7 percentage points over the long term. "Strengthening the Single Market along these dimensions will not only help growth—it is also the right answer to geoeconomic fragmentation as it strengthens resilience,” he said, noting that another benefit of a more deeply integrated Single Market is energy security. Kammer also called for advancement of the Capital Market Union to catalyze productivity growth, as well as stronger and more integrated labor markets. “Europe has made immense progress in integration, economically and politically, yielding substantial benefits,” said Kammer. “The journey needs to continue without any further delay. A fully integrated Single Market would greatly enhance productivity and, as a result, the EU’s competitiveness. Undertaking the reforms to achieve a true Single Market would show once again how Europe can overcome even the most severe obstacles when acting decisively and together," he concluded. |
