"Europe is doing quite well", says Michael Deppler, Director IMF Europe
Michael Deppler notes: "If you look at the last few years, monetary policy in our view has been appropriately conducted not only in the ECB but also in other member states of the EU. We see fiscal policies which obviously ran into difficulties a few years ago, basically having gotten back on track over the past few years and through this year, and then also, structural reforms. Clearly, countries did significant structural reforms. Pensions, benefit systems, reservation wages, and wages themselves have been quite good.
In terms of spending, the fiscal authorities have been fairly prudent in their management of the fiscal situation, and in our view, this is quite appropriate, because it clearly is an overheating situation underlying the situation there, so the fiscal budget, which is in surplus, needs to remain in surplus, and basically use this money later to try and implement reforms and strengthen the supply side of the economy.
I think Europe underestimates how well it responds to competition. I know Europe has problems with closures of enterprises and turnover, but if you look at the tradable goods sector of Europe and you ask the question where is the strongest growth that has happened over the years in Europe, it's clearly in the export sector. This is the strongest influence on growth. And if you look at the size of the sector relative to other industrial countries, Europe is doing very much per the others."
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