Saturday 16 January 2021
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IMF and ECB warn of declining economic growth

The International Monetary Fund (IMF) believes that the euro countries should take precautionary measures in case economic growth starts to stagnate. That chance has increased due to problems in the industrial sector, trade and because the European Central Bank has little money to boost the economy again, the IMF and ECB report in their quarterly reports.

Trade and industry weakness can spread to other industries. The IMF not only sees risks to economic decline but also expects a lower economic growth: 1.2 instead of 1.3 percent. The lower growth is mainly caused by the faltering German economy. The Germans suffer from the protracted trade war between the United States and China, the Brexit and the slowdown in the Chinese economy.

The Dutch and German governments must therefore spend more money to stimulate economic growth. Now that interest rates are so low, governments must take over, says the IMF. It is not unexpected that the IMF focuses specifically on the Netherlands and Germany in the report. From the financial markets there has been pressure on both countries for a long time to borrow and invest heavily. The national debt in the Netherlands is low compared to the other EU countries.

“With its budget surplus, the Netherlands should invest much more in infrastructure, education or innovation. By keeping a tight grip, The Hague could spur economic growth, "said Christine Lagarde, president of the European Central Bank in October, just before being appointed to her new position.

The European Commission warns about & #8220; turbulent & #8221; economic times in the near future. In its estimates, it is adjusting downwards growth forecasts for the eurozone for 2019 and the coming two years. According to Vice-President Valdis Dombrovskis, international trade conflicts, increasing geopolitical tensions, a persistently weak industry and the Brexit threaten the European economy.

The European Commission has also been concerned for some time about the possible consequences of US trade policy and the British departure from the EU. There is a threat of a longer period of moderate economy in the EU, according to Brussels. For this year, the committee expects an average of 1.1 percent growth for the euro countries, down from 1.2 percent in the earlier forecast.

Commissioner Dombrovskis called on the Member States to take action. He urged Member States with high government debts to reduce them and countries that can use their budget room. There is satisfaction with the EU about the further falling unemployment in the eurozone, on average 7.4 percent next year.

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