In Europe, de Rato urges policy action to stem downside risks

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Although the global economic recovery has not fully recaptured the stamina lost late last year, activity could regain momentum later this year, IMF Managing Director Rodrigo de Rato said in Paris May 3, where he met with French President Jacques Chirac and attended the Ministerial Meeting of the Organization for Economic Cooperation and Development. De Rato said downside risks have increased for the global economy and urged the international community to address global imbalances.

"But there is reason to believe that growth momentum could be recovered in the second half of this year," he told the press.

For the euro area, which has suffered from slow growth, de Rato did not rule out interest rate cuts given low inflationary pressures and inflation expectations, although the key to achieving lasting and strong growth in Europe is structural reform.

He acknowledged that past reforms have made Europe's labor markets more robust and resilient but added that structural unemployment was still too high. In addition to structural reforms and long-term growth, de Rato said the euro area countries need more ambitious fiscal policies to meet the challenge of population aging.

France's economic growth continues to outperform the euro area as a whole, but not enough jobs are being created and the labor...

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