World Bank Group Chief Executive Kristalina Georgieva arrives in Washington, D.C., the United States, on Friday, April 19, 2024, to attend a briefing at the annual meetings of the International Monetary Fund (IMF) and the World Bank .
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The head of the International Monetary Fund on Thursday called on Europe to realize the full potential of its precious single market and lamented what she said was a “supermarket of ideas” that made the region look like the United States.
International Monetary Fund President Kristalina Georgieva said in an interview with CNBC reporter Karen Tso that European economic performance is strengthening and inflation is clearly on a downward trajectory.
In fact, while the International Monetary Fund observes a rise in consumption, Georgieva said that the ECB’s expected interest rate cuts may help investment in the euro zone and boost the economic performance of the 20 member countries of the euro zone.
“We bring this relatively good news with a warning: the eurozone has no time to waste focusing on productivity,” Georgieva said.
“That means two things. One, realizing the full potential of the single market. That’s not there yet. We want to see European labor markets become more flexible, we want to see financial markets deepen, integrate them (and) we want to see The banking union and the capital union are in place,” she continued.
“Second, we want to see more focus on innovation, investment (research and development) so that businesses based on European innovation can be realized in Europe. At the moment, Europe looks like the supermarket of creativity in the U.S. state,” Olkieva said.
“A lot of the stuff that’s invented here ends up being commercially viable and scalable abroad, and when you look at the main obstacle? (is) 27 countries haven’t integrated into one market yet.”
U.S. Productivity Gap
EU single market seek Ensure unrestricted movement of goods, capital, services and labor throughout the territory.
The single market was established over 30 years ago to allow EU citizens to live and work across the EU and to provide consumers with a wider choice of quality services and products.
The International Monetary Fund believes that deeper single market integration can further promote economic growth in the region.
In April, the Washington, D.C.-based institute estimated In the long term, reducing remaining barriers to the single market for goods and services by 10% could boost European output by up to 7 percentage points.
Georgieva said: “The euro area is now focused on key issues for the future. The first of these is how to increase productivity and maintain parity with competitors, especially the United States.”
The managing director of the International Monetary Fund highlighted the fund’s growth prospects for the euro zone, saying the euro zone is expected to grow by 0.8% in 2024, compared with 0.4% in 2023, and by 1.5% next year.
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