EUROPEAN economic growth is strong, mainly thanks to domestic demand, but governments are not taking sufficient advantage of the good times to reduce their debt and implement reforms, the International Monetary Fund said yesterday.
The IMF forecast that growth in advanced European economies, mainly the eurozone, would slow to 2.3 percent this year from 2.4 percent in 2017 and then decelerate to 2 percent in 2019. The European Commission forecasts the same growth slowdown.
“Amid the good times, however, fiscal adjustment and structural reform efforts are flagging,” the IMF said.
“With economic prospects continuing to improve in the short term but medium-term prospects less bright, policy-makers should seize the moment to rebuild room for fiscal manoeuvre and push forward with reforms to boost growth potential,” the IMF said.
Despite the strong growth, some of the biggest eurozone economies like France, Italy or Spain have been slow to further reduce their budget deficits toward a balanced position while others, like Belgium, are increasing the shortfall.
“In many economies, policy-makers should strive to bring fiscal deficits within range of balance over the next few years,” the IMF said.