Latest news with #IMF
Yahoo
2 hours ago
- Business
- Yahoo
IMF chief: European lifestyle is at risk if productivity isn't boosted
Europe needs to boost its growth in the face of global headwinds or risk losing its way of life, said the head of the International Monetary Fund Kristalina Georgieva on Wednesday. 'I don't want Europe to become the United States of America, but I want the productivity and functionality of Europe to go up,' she told Euronews. 'In Europe we enjoy being a lifestyle superpower. Unless we become more productive we may lose this advantage,' she added. Georgieva was speaking ahead of the publication of a new IMF statement on Thursday, which offers economic suggestions to eurozone nations. One key message is that Europe must speed up progress on the single market, which ensures the free movement of goods, services, capital and people between single market nations. 'There are no tariffs within Europe, but it doesn't mean there are no barriers in Europe, regulatory and otherwise,' Georgieva told Euronews. The IMF estimates that barriers to free movement in the single market are equivalent to a 44% tariff on goods and a 110% tariff on services. Georgieva noted that in the US, what is produced in one state is split 30-70, meaning 30% is consumed in that state and 70% is sent to other states. In Europe, on the other hand, 70% of production is consumed domestically while 30% is sent abroad. This is a set-up that limits growth by keeping markets smaller and less competitive. 'If Europe completes the single market, over 10 years, it would boost GDP by 3%,' said Georgieva. Related US tariffs will not spark global recession but will weaken economy, IMF says EU budget needs 'a comprehensive overhaul' to handle shocks, says IMF Means to advance progress on this front include lowering regulatory fragmentation, supporting labour mobility, facilitating cross-border banking mergers, integrating the energy market, and making progress on the capital markets union (CMU) — said the IMF. The CMU aims to allow investment and savings to flow seamlessly across member states. This would make it easier for businesses in one EU state to source funding from another EU state, supporting firms to grow and create jobs. In terms of deepening capital markets, the IMF's statement added that the EU should 'increase institutional investors' familitary with venture capital as an asset class and address remaining undue restrictions on their ability to invest in it'. Looking ahead, the IMF expects eurozone growth at a moderate 0.8% in 2025, picking up to 1.2% in 2026. Trade and geopolitical tensions are expected to dampen sentiment and weigh on investment and consumption. With regards to interest rates, the IMF argued that 'a monetary policy stance close to neutral is justified' as headline inflation nears the ECB's 2% target. When balancing spending pressures with fiscal sustainability, the IMF recommended that countries with strong public finances support countries with less room for manoeuvre. 'It is crucial that care be taken in implementing the EU fiscal rules to ensure that countries with low fiscal risks that intend to increase spending to boost potential growth and enhance resilience should not be constrained from doing so by the rules,' said Thursday's statement. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Scoop
2 hours ago
- Business
- Scoop
Development Is ‘The First Line Of Defense Against Conflict,' Guterres Tells Security Council
19 June 2025 Ambassadors met to debate how poverty, inequality, and underdevelopment are fuelling conflict and instability, at a time when hostilities are increasing and demand for humanitarian aid is rising as resources dwindle. Every dollar spent on prevention could save up to $103 in conflict-related costs, according to the International Monetary Fund (IMF). Sustainable development critical Conflicts are proliferating and lasting longer, said Mr. Guterres. At the same time the global economy is slowing and trade tensions are rising, as aid budgets are being slashed while military spending soars. He warned that if current trends continue, two thirds of the world's poor will live in conflict-affected or fragile countries by the end of this decade. 'The message is clear,' he said. 'The farther a country is from sustainable and inclusive development, the closer it is to instability, and even conflict.' Give peace a (fighting) chance The Secretary-General highlighted how the UN has worked to advance the three pillars of peace, development and human rights. These efforts began with its establishment 80 years ago and continue today, 'guided by the simple principle that prevention is the best cure for instability and conflict, and there is no better preventive measure than investing in development,' he said. 'Development gives peace a fighting chance. It's the first line of defence against conflict. But right now, we're losing ground,' he said, noting that 'the engine of development is sputtering.' World falling short Currently, two-thirds of the targets under the Sustainable Development Goals (SDGs) are lagging 10 years after adoption. 'The world is falling short by over $4 trillion annually in the resources developing countries need to deliver on these promises by 2030,' he added. Furthermore, 'developing countries are being battered and bruised by limited fiscal space, crushing debt burdens and skyrocketing prices.' Fix the 'engine' The Secretary-General pointed to the fourth Conference on Financing for Development, which begins next week in Spain, as an important moment 'to fix and strengthen this essential engine.' He called for renewed commitments towards securing public and private finance for the areas of greatest need, providing urgent relief for debt-laden countries, and reforming the outdated global financial architecture. The Council debate 'could not be more prescient,' said Kanni Wignaraja, the UN Development Programme's (UNDP) Assistant Secretary-General and Regional Director for Asia and the Pacific. Break the cycle Global human development has stalled just as violent conflicts have surged to levels not seen in eight decades, she said, before presenting three priorities for investment to help break the cycle, including protecting household economies. 'In fragile settings, where peace and security have been shattered, development that goes directly to the local level becomes the first line of peoples' defence and survival. And their hope for recovery,' she said. 'From these local economies - where livelihoods are restored, water and electricity can flow again, women's businesses in particular reopen, farmers can trade food, and there is basic finance to allow markets to stay afloat – from this, comes the resources to build back broken capabilities and resilience.' Address systemic imbalances The Chairperson of the African Union (AU) Commission, Mahmoud Youssouf Ali, recalled how the continent loses billions of dollars annually to conflict, which could be channeled into schools, hospitals, infrastructure and innovation. He said the international community must also acknowledge that poverty and underdevelopment 'are not confined within national borders" but are global challenges that require global response. 'If we are to uphold international peace and security, we must address the systemic imbalances – economic, political, and institutional – that continue to fuel deprivation, exclusion, and instability across regions,' he said. In this regard, the AU called for enhanced support to African-led peace operations, particularly those deployed in regions where poverty and underdevelopment are deeply entrenched. Collective action required The debate was convened by Guyana, which holds the rotating Council presidency this month. The country's Foreign Minister, Hugh Todd, remarked that with the world 'at a critical juncture where the interlinkages between peace, security and development have never been more pronounced,' collective and decisive action is required. He cautioned against 'prioritizing only political solutions in conflicts where poverty and underdevelopment feature prominently,' as creating conditions for socio-economic stability and well-being are also critical for peace. Mr. Todd urged countries to address issues such as lack of access to education, underemployment, exclusion, and greater participation of women and youth. 'Currently, the global youth population is the highest in history, with most young people concentrated in developing countries,' he said. 'For us to harness their full potential, they must be given adequate economic opportunities and be involved in decision making on peace and security.'
Euronews
4 hours ago
- Business
- Euronews
IMF chief: European lifestyle is at risk if productivity isn't boosted
Europe needs to boost its growth in the face of global headwinds or risk losing its way of life, said the head of the International Monetary Fund Kristalina Georgieva on Wednesday. 'I don't want Europe to become the United States of America, but I want the productivity and functionality of Europe to go up,' she told Euronews. 'In Europe we enjoy being a lifestyle superpower. Unless we become more productive we may lose this advantage,' she added. Georgieva was speaking ahead of the publication of a new IMF statement on Thursday, which offers economic suggestions to eurozone nations. One key message is that Europe must speed up progress on the single market, which ensures the free movement of goods, services, capital and people between single market nations. 'There are no tariffs within Europe, but it doesn't mean there are no barriers in Europe, regulatory and otherwise,' Georgieva told Euronews. The IMF estimates that barriers to free movement in the single market are equivalent to a 44% tariff on goods and a 110% tariff on services. Georgieva noted that in the US, what is produced in one state is split 30-70, meaning 30% is consumed in that state and 70% is sent to other states. In Europe, on the other hand, 70% of production is consumed domestically while 30% is sent abroad. This is a set-up that limits growth by keeping markets smaller and less competitive. 'If Europe completes the single market, over 10 years, it would boost GDP by 3%,' said Georgieva. Means to advance progress on this front include lowering regulatory fragmentation, supporting labour mobility, facilitating cross-border banking mergers, integrating the energy market, and making progress on the capital markets union (CMU) — said the IMF. The CMU aims to allow investment and savings to flow seamlessly across member states. This would make it easier for businesses in one EU state to source funding from another EU state, supporting firms to grow and create jobs. In terms of deepening capital markets, the IMF's statement added that the EU should 'increase institutional investors' familitary with venture capital as an asset class and address remaining undue restrictions on their ability to invest in it'. Looking ahead, the IMF expects eurozone growth at a moderate 0.8% in 2025, picking up to 1.2% in 2026. Trade and geopolitical tensions are expected to dampen sentiment and weigh on investment and consumption. With regards to interest rates, the IMF argued that 'a monetary policy stance close to neutral is justified' as headline inflation nears the ECB's 2% target. When balancing spending pressures with fiscal sustainability, the IMF recommended that countries with strong public finances support countries with less room for manoeuvre. 'It is crucial that care be taken in implementing the EU fiscal rules to ensure that countries with low fiscal risks that intend to increase spending to boost potential growth and enhance resilience should not be constrained from doing so by the rules,' said Thursday's statement. As widely anticipated, the Bank of England (BoE) decided to keep its benchmark rate at a 2-year low of 4.25% on Thursday. This comes as fears grow that the conflict between Israel and Iran will escalate and that US tariffs will further fuel inflation. Six out of the nine-member panel of the monetary policy committee voted to hold, while three of them saw fit to cut. The bank lowered its rate to 4.25% in May, the fourth cut after an aggressive tightening period in 2022-2023. More cuts are still expected in the coming months by the market. The central bank's benchmark interest rate determines how banks change their rates on savings and loans. UK inflation, the primary figure driving the monetary policy committee's decisions, came in at 3.4% on Wednesday, far above the BoE's 2% target. Price increases, however, slowed slightly compared to the annual price change measured in April, which stood at 3.5%. The prevailing view at the bank was that inflation would remain elevated over the coming months but start to slow towards next year. But an uptick in oil prices, due to the current geopolitical crisis between Israel and Iran, could change this, as energy prices translate into the costs of producing and transporting all other goods. 'The risk to energy prices has clearly intensified and moved up the agenda given developments in the Middle East,' Sandra Horsfield, an economist for Investec, told AP. Uncertainty over the level of tariffs US President Donald Trump will impose around the world is also clouding the outlook for prices across the globe. 'We are still awaiting the full impact of Donald Trump's tariffs to show up in the prices of goods. We are approaching the end of the 90-day pause on reciprocal tariffs, and what happens from there is really anyone's guess,' Lindsay James, investment strategist at Quilter said. She added that even with the US-UK trade deal, the raft of tariffs on other nations would likely be felt in some form in the UK too. This will especially be the case if the UK's biggest trading partner Europe leaves the table with no agreement. While setting their focus on inflationary risks, the BoE also need to consider that growth in the UK economy is slow and could benefit from lower interest rates. In April, economic output sank by 0.3%, due to falling exports to the US and higher costs for businesses, including a tax raise. "The expectation is the UK economy will stagnate again in the second half, making the need for rate cuts more prominent," James said. "But with risks on the global stage not only uncertain but also substantial, the mantra of rates being 'higher for longer' will continue.'
Bloomberg
7 hours ago
- Business
- Bloomberg
IMF Chief Says Now Is Great Time to Boost Global Role of Euro
International Monetary Fund Managing Director Kristalina Georgieva sees a chance to strengthen the euro's wider role. 'There is a great opportunity for the euro to play a bigger role globally,' she told reporters in Luxembourg on Thursday. 'When you look at the search for quality safe assets, at this point it is facing constraint on the offering of this asset.'
Bloomberg
8 hours ago
- Business
- Bloomberg
IMF Sounds Stagnation Alarm on Euro-Zone Economic Growth
Europe risks drifting into stagnation without urgent action to tackle slowing growth, weak investment and rising geopolitical threats, the International Monetary Fund warned. Trade tensions and low demand are choking momentum, with risks tilted sharply to the downside, the Washington-based institution said in a statement on Thursday. The euro area is expected to grow just 0.8% in 2025, despite record-low unemployment and inflation near target.
