IMF Managing Director Kristalina Georgieva arrives for a briefing in Washington, DC on Friday, April 19, 2024.
Bloomberg | Bloomberg | Getty Images
The head of the International Monetary Fund urged Europe on Thursday to realize the full potential of its valuable domestic market, complaining that the region looks like what she described as an “ideas supermarket” for the United States
Speaking to CNBC’s Karen Tso, IMF Managing Director Kristalina Georgieva said Europe’s economic output is improving and inflation is clearly on a downward trend.
Georgieva said that the IMF’s observation of an increase in consumption and expected interest rate cuts from the European Central Bank were good news for investments in the euro zone. She said it would boost the 20-member bloc’s economic performance.
“We come with this relatively good news and with a warning: the euro zone must lose no time in focusing on productivity,” Georgieva said.
“That means two things. Firstly, to exploit the full potential of the internal market. That’s not that far yet. We want to see more labor market flexibility in Europe, that’s what we want.” [a] deepening [of] the financial markets and their integration [and] “We want to see the banking union and the capital union,” she continued.
“And secondly, we want to see much more attention and investment in innovation [research and development], making it possible for business based on innovation to happen in Europe. “Right now Europe looks like a supermarket of ideas for the United States,” Georgieva said.
“A lot of what is invented here ends up being commercially viable and at scale there, and if you look at the main obstacle: 27 countries that are not yet integrated into a single market.”
Productivity gap in the USA
The European Union’s internal market is intended to ensure the unrestricted movement of goods, capital, services and labor throughout its territory.
Created more than 30 years ago, the Single Market aims to enable EU citizens to live and work across the EU and offer consumers a wider choice of high-quality services and products.
The IMF believes deeper domestic market integration could further boost the region’s economic growth.
In May, the Washington, D.C.-based institute said in a blog post that an IMF report published in 2023 estimated that reducing remaining barriers in the single market for goods and services by 10% could increase European output by up to 7 percentage points long-term.
“The euro area is now focusing on crucial questions for the future. Number one among them: How to increase productivity on a par with the competition, especially the USA,” Georgieva said.
The IMF chief reiterated the fund’s growth prospects for the euro zone, saying the bloc was on track to record a growth rate of 0.8% in 2024, compared with 0.4% in 2023 – and next year to increase by 1.5%.
Correction: An earlier version of this article misstated the month in which the IMF said a 10% cut would increase European production by up to 7 percentage points.
Source link
2024-06-20 16:23:37
www.cnbc.com
