writes the International Monetary Fund (IMF) in the World Economic Outlook published this afternoon, the semi-annual review of the global economy. The eurozone is in the report forward as the ultimate problem child of the world. Although beyond dominates the middle, but the risks are behapbaarder and the chances of a greater acceleration.
For the eurozone, the IMF is worried that the high public and private debt, high unemployment and low confidence in the future a self-reinforcing spiral creates a vicious circle in which the investment does not respond to the low interest rate but increasingly left behind. This affects the potential growth. Thus, high unemployment leads to a less skilled labor force and then back to higher unemployment.
Headache File
“The risk is that the recovery in the eurozone collapses, that demand weakened further and that low inflation leads to deflation,” states Olivier Blanchard, chief economist of the IMF, in his foreword to the report. Blanchard emphasizes that this stagnation in the eurozone are basic scenario – that the return to a growth rate in the medium term of 1.5% – but if bleak scenario a reality would still be higher than that thé headaches file for the global economy would be <. / p>
To reduce the risk stagnating domestic demand should be supported. Monetary seen the ECB does what she can with her rate cuts, her bank liquidity injections and its buyout programs bundled business loans. Frankfurt but will if necessary be willing to buy his state loans the IMF said. In addition, the ECB is doing a good job with the bank screening. Which is essential for restoring confidence and the unblocking of the credit channel.
Investing
On the budget side, it is positive that most of the cuts have been behind it. That should boost the eurozone economy. But countries that have space to do more, should not hesitate to do the same. Germany for example, should invest in its infrastructure securely. In the event that there is a serious deflation occurs and monetary assistance is no longer sufficient, “the directions will have to be used in the budget framework. It must therefore, according to the IMF, the standard of Maastricht to be stretched.
However, the multilateral institution is ensuring to imagine that all salvation to expect a demand response. Also on the supply side of the economy of the euro area are still waiting many problems to be solved. Structural reforms to productivity and competitiveness, especially for the southern countries increase. Countries with a chronic surplus on the current account, such as the Netherlands, will in turn should boost. Domestic activity
recession and deflation
The chance that the eurozone over a year into recession has slipped again, incidentally, is quite increased. Came in April from the models of the fund is rolling out a probability of less than a quarter, now that almost 40%. And the risk of deflation has risen to 30%, from just over 20% in April. Elsewhere in the world, the chance is negligible
That the odds of a poor outcome as increased because of the economy. – has underperformed in the first half – just as is true for most countries in the world. The buffer is therefore less than expected, leaving a small shock can be.
Slight recovery
The basic scenario of the IMF, however, that both developed and emerging countries will see candlesticks in the rest of 2014 recovery and in 2015, this is mainly because governments fiscal retrenchment to reduce and, secondly, because presumably reduce the geopolitical tensions in the world what.
For the world, the fund now expects a growth of 3.3% in 2014 which is 0.4 percentage points below the expectation of April For 2015, there is 3.8% in the barrel. Thereby pointing in the developed world, the USA and UK road (with growth rates of around 3%), while China and India do that for the emerging world
However, the IMF stressed that the growth potential of these emerging countries comes down. Average is now 1.5% lower than in 2011 thought. Many countries have their domestic economies as overly rushed to stay out of the crises in North America and Europe safeguarded. As a result, credit bubbles are formed and budget deficits and current account. These weaknesses need to be addressed with structural reforms. A country like India there is now well on their way.
Netherlands
The Dutch economy will grow this year by 0.6%. Although this is a significant improvement compared with the contraction of 0.7% in 2013, but again remains Netherlands behind the average in the eurozone. After the minus of 0.4% is this year an increase of 0.8% from the bus for the countries of the currency union. For next year is 1.3% for the euro area in the barrel, while the Netherlands can count.
1.4% Unemployment will rise this year to 7.3%, but in 2015, the IMF back on a slight decline to 6.9%. At this point, Netherlands does significantly better than most other euro countries.
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