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Tag Archives: euro area

Chart of the Week: Central and Eastern Europe Close the Gap

By IMFBlog May 22, 2017 Version in Русский (Russian) Most of the countries of Central, Eastern, and Southeastern Europe will see their economies humming away at a strong growth rate in 2017. A measure of their success at fully utilizing their economic machine is the output gap—the difference between what the economy is currently producing, and what it can produce when it is at full capacity. Our Chart of the Week from a recently published report on the Central, Eastern, and Southeastern...

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Maintaining the Positive Momentum of the Global Economy

By Christine Lagarde Versions in: عربي (Arabic), Français (French), and Deutsch (German) Baden-Baden, the German spa town built on ancient thermal springs, is a fitting venue to discuss the health of the global economy during this week’s meeting of the Group of Twenty finance ministers and central bank governors. Policymakers will likely share a sense of growing optimism, because the recent strengthening of activity suggests that the world economy may finally snap out of its multi-year...

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The Euro Area Workforce is Aging, Costing Growth

By Shekhar Aiyar, Christian Ebeke, and Xiaobo Shao In parallel to the aging of the general population, the workforce in the euro area is also growing older. This could cause productivity growth to decline in the years ahead, raising another policy challenge for governments already dealing with legacies from the crisis such as high unemployment and debt.  The euro area’s population is expected to grow significantly older over the next couple of decades. This has two components. First, the...

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Sluggish Business Investment in the Euro Area: The Roles of Small and Medium Enterprises and Debt

By John C. Bluedorn and Christian Ebeke Small businesses could be the lifeblood of Europe’s economy, but their size and high debt are two of the factors holding back the investment recovery in the euro area. The solution partly lies in policies to help firms grow and reduce debt. Our new study, part of the IMF’s annual economic health check of the euro area, takes a novel bottom-up look at the problem. We analyze the drivers of investment using a large dataset of over six million observations...

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Unemployment: Troubles Ahead for Emerging Markets

By Prakash Loungani and Zidong An Forecasts of real GDP growth attract a lot of media attention. But what matters more to the person on the street is how growth translates into jobs. Unfortunately, the mediocre growth outlook of recent years may lead to a disturbing outlook for jobs, particularly among fuel-exporting countries and in the Latin America and Caribbean region. The global picture Chart 1 provides a measure of the global unemployment rate based on data for 116 countries, of which...

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Warning Signs as Global Financial Risks Increase

By José Viñals Versions in عربي (Arabic), 中文 (Chinese), Français (French), Русский (Russian), and Español (Spanish)   Over the last six months, global financial stability risks increased as a result of the following developments: First, macroeconomic risks have risen, reflecting a weaker and more uncertain outlook for growth and inflation, and more subdued sentiment. These risks were highlighted yesterday at the World Economic Outlook press conference. Second, falling commodity prices...

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Reviving Credit in the Euro Area

by Jean Portier and Luca Sanfilippo A stock in excess of €900 billion of nonperforming loans continue to clutter the European banking system, impeding economic growth. This issue remains a key challenge for policy makers. As we show in our latest Global Financial Stability Report, part of the solution to address this legacy is an upgrade in legal systems. Current inefficiencies—long foreclosure times and insolvency procedures—are a reason for the gap between the value of loans on bank balance...

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The Effects of Wage Moderation: Can Internal Devaluations Work?

By Jorg Decressin and Prakash Loungani Devaluation is often part of the remedy for a country in financial trouble. Devaluation boosts the competitiveness of a country’s exports and curtails imports by making them more costly. Together, the higher exports and the reduced imports generate some of the financial resources needed to help the country get out of trouble. For countries that belong to—and want to stay in—a currency union, however, devaluation is not an option. This was the situation...

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Global Financial Stability: Vulnerabilities, Legacies, and Policy Challenges

(Versions in 中文, Français, Русский, and Español) Today global financial stability is not yet assured and downside risks prevail. Our recommendation is for an urgent upgrade in policies, to avoid downside risks and to achieve our upside scenario of “successful normalization” of monetary and financial conditions. This will secure financial stability and strengthen the economic recovery. Let me first provide you with our overall assessment for financial stability. How has it changed since our...

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A Strategy for Resolving Europe’s Problem Loans

By Shekhar Aiyar and Anna Ilyina Problem loans are clogging the arteries of Europe’s banking system. The global financial crisis and subsequent recession have left businesses and households in many countries with debts that they cannot repay. Nonperforming loans as a share of total loans in the EU have more than doubled since 2009, reaching €1 trillion—over 9 percent of the region’s GDP—by end-2014.  These loans are particularly high in the southern part of the euro area, as well as in...

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