you are currently viewing:A United Europe Can Shape the Global EconomyJune 3, 2025--The European Union must unite to shape today's global economy, rather than be shaped by it Yet lately the EU has lost confidence in its economic model. Wealthier than China and more populous than the United States, it has been trailing both in growth and has fallen back in technological innovation since the global financial crisis. The growth gap is widening as the continent’s workforce shrinks, productivity stagnates, and trade tensions rise. And now governments are scrambling to boost defense spending to rely less on the United States for their security. Can the EU rouse itself to meet the challenges of a new era marked by rapid geopolitical shifts and policy uncertainty? The newest issue of Finance & Development examines that question in depth. Source: IMF.org |
July 3, 2025-Abstract
Russia's war of aggression against Ukraine and rising trade tensions continue to slow down the European economy. Despite strong policy responses to external shocks, the near-term outlook is clouded by elevated uncertainty. Disinflation is progressing, but monetary policy should remain vigilant. Fiscal policy needs to make space for new spending needs, such as defence, but to ensure medium-term sustainability, fiscal prudence must continue.
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