Antonio Borges and Lucas Papademos discuss IMF Outlook for Europe
On May 12th, Antonio Borges, Director of the European Department of the International Monetary Fund (IMF), presented the key facts of the IMF’s new Regional Economic Outlook for Europe at the House of Finance. Following the financial crisis, economic recovery is now gaining strength. The IMF expects stable growth in Europe, with the exception of the three problem countries Greece, Ireland, and Portugal. Borges referred to failures in market integration, as one reason for the inequalities within the euro area: “Europe is far from a fully integrated market. There is still a lot of protection in place, for example in industries like energy or transportation.”
Also on the panel was Lucas Papademos, former member of the ECB Executive Board and now Researcher at Harvard University and Senior Fellow at the Center for Financial Studies (CFS). Papademos commented on the EU debt crisis and the economic problems in Greece. In his opinion, a debt restructuring is not desirable, because the risks from such a measure would outweigh possible benefits. In his view, a restructuring should also not be necessary, if Greece imposes the implemented savings program correctly.
The discussion was chaired by Otmar Issing, former Chief Economist of the ECB and President of the CFS. He showed self-criticism in respect to the role of academia before the financial crisis: “We underestimated the risks.” The discussion took place in front of a very interested audience. Latecomers had to bring their own chairs as the lecture room was fully occupied.