The European Union reports stronger economic growth and all 28 countries are expanding positively for the first time in a decade. This is very good news for the European economy, but inflation is still relatively weak, revealed the IMF Director for Europe, Jeffrey Franks.
“We also have the extraordinary incentives that support this growth”, added the economist. In his words, the fund supports the ECB’s policy of continuing to support some more time. “And to meet the criteria for sustained inflation targeting before the program is stopped”, added Jeffrey Franks.
According to the IMF Director for Europe, in some countries, especially those with high debt, there is a need to build fiscal buffers against this point in the future when interest rates rise. In his words, it is now time for European countries, which may be at risk of future tightening of monetary policy, to build the necessary buffers to secure against problems when incentives stop.
“The survey we made about conversions shows that there is a freeze in income conversions among Member States with the adoption of the Euro. This does not necessarily mean that the Euro is the cause of stagnation. But stagnation can lead to frustration, which results in populism”, said Jeffrey Franks.
However, it states that the eastern Eurozone countries since the initial start of the currency are adapting well. “We are talking about the Baltic countries, Slovakia, Malta and others. There was a significant income conversion”, he explains.