POSSIBLE RECESSION IN THE FUTURE: IN 2011 GDP +2,3%, 2012 +1,8%
The International Monetary Fund does not rule out the possibility that Europe could go back into a recession. However, at least for the time being, estimates speak of growth still alive, albeit in continuous slowdown: the average increase in EU GDP should settle at 2,3% this year, to then drop to +1,8% in 2012. These are the figures published in the latest report by the Washington institution, the "Economic Outlook" on Europe. Today, on the eve of the ECB directorate, the document was delivered to the European Commission in Brussels.
ECB CUT RATES, RENEGOTIATE AID TO GREECE
The Fund urges the Old Continent to stop tightening monetary policy and do more to revive production, even if the most serious problem remains that of public debts. As regards Greece, the IMF argues that it will be necessary to renegotiate the terms of the second aid plan, focusing more on debt sustainability.
"The ECB must focus more on measures to revive growth - said Antonio Borges, director of the European Department of the IMF, in an interview with Bloomberg TV - and should cut rates if the turbulence persists". Meanwhile, "it is probable that the institute will continue to buy government bonds of the most indebted countries".
EFSF COULD BUY ITALIAN AND SPANISH BONDS
For its part, the fund is "working to limit the spread of Italy and Spain, countries that pay the highest interest costs on sovereign debt" and which, due to "more expensive interest" and the latest economic maneuvers, see " increased tensions on the banks”. All this will constitute a "further obstacle to an already modest activity".
In short, “it is absolutely important that confidence is restored in Italy and Spain and investors are brought back to these markets. This may require public sector involvement. The EFSF will be able to be used in a way aimed at this purpose”.
ITALY: ACCOUNTS ARE GOOD, BUT GROWTH IS NEEDED
By narrowing the focus only on our country, according to Borges, "the problem is growth, but the public finances are good, they have never been better than now". And again, as announced yesterday by Giulio Tremonti, Borges remarked that Italy “has an even better primary surplus than Germany's”.
In any case, in its latest report, the IMF judges the Italian economic growth of the last 20 years to be "disappointing". Development has been weighed down by an overly complex tax system, ineffective reforms and low labor productivity.
