Unless the economies of the 19 Eurozone member states converge there will be repeated crises.
The stark warning came in a regular IMF assessment presented to the Eurogroup on Thursday evening. According to Reuters, the report points out that the competitiveness gap between the 19-member states is likely to trigger “bouts of instability.”
However, the IMF also noted that euro zone economic recovery was convincing, predicting 1,6% growth for 2018 and 2019. Growth prospects are in fact weak in the Eurozone, compared with the United States and the Pacific, while there is a declining ability to “cushion” potential political risks.
Signaling the “risks” the IMF report refers to “political discord” between advanced economies and elections in several Eurozone member states.
Referring indirectly to Greece, Italy, and Portugal, the IMF noted that “countries with high public debt will face difficulty coping with higher borrowing costs when monetary policymakers begin to reduce the extent of accommodation.”
What the IMF prescribes is public spending and real income rises in member states with considerable trade and budget surplus, namely the Netherlands and Germany.