FRANKFURT • The global economy can thank Europe’s robust growth for the improving outlook, according to the International Monetary Fund (IMF) said.
Forecasting 2.4% expansion in the region this year, up from 1.7% 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 yesterday.
The region has benefitted 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.
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 US combined. — Bloomberg