1 / 18

The Euro Area: An Unbalanced Rebalancing?

Petya Koeva Brooks and Mahmood Pradhan European Department, IMF. The Euro Area: An Unbalanced Rebalancing?. Recent IMF work on imbalances. Chapter 4, World Economic Outlook, October 2014: “Are Global Imbalances at a Turning Point?”

garrison-neal
Download Presentation

The Euro Area: An Unbalanced Rebalancing?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Petya Koeva Brooks and Mahmood Pradhan European Department, IMF The Euro Area: An Unbalanced Rebalancing?

  2. Recent IMF work on imbalances • Chapter 4, World Economic Outlook, October 2014: “Are Global Imbalances at a Turning Point?” • IMF SDN 14/7, July 2014: “Adjustment in Euro Area Deficit Countries: Progress, Challenges, and Policies” • IMF Country Report No. 14/199, July 2014: “External Rebalancing in the Euro Area: Developments and Policies”

  3. Key points • Point 1: Current account imbalances have narrowed • Point 2: Adjustment has been asymmetric • Point 3: Demand contraction—as opposed to relative price adjustment—has been the main driving factor • Point 4: The adjustment is expected to be durable; but much depends on underlying view of potential output/output gap • Point 5: Both country-specific and area-wide policies are important to advance the adjustment within the euro area

  4. Point 1: Global current account imbalances have narrowed

  5. Point 1: EA current account (deficit) imbalances have shrunk

  6. Point 2: The adjustment has been asymmetric

  7. Point 3: Demand contraction has been the key driver

  8. Point 3: In the euro area, unit labor costs have declined in most countries...

  9. Point 3: …but due to major labor shedding in some cases

  10. Point 3: Relative price adjustments have mattered (to some degree) for exports

  11. Point 4: Narrowing of global flow imbalances is projected to be durable…

  12. Point 4: …though stock imbalances are expected to persist or even widen

  13. Point 4: What is the role of potential output for assessing the durability of adjustment?

  14. Point 5: Further policy efforts, both at the country and area-wide levels, would bring more rebalancing and growth

  15. Thank you!

  16. Backup Slides

  17. Title

  18. Title

More Related