IMF: European economies must reform

European economies are strong, but countries need to enact economic reforms to improve competitiveness and prepare for the ageing of the continent’s population, the head of the International Monetary Fund said today.

IMF managing director Rodrigo de Rato, in a speech at Georgetown University, said he was pleased that Germany, which currently heads the revolving presidencies of the European Union and the Group of Eight industrial nations, has promised to re-evaluate European economic policies and focus on promoting jobs and growth.

He said that the EU should prioritise reforming its member countries’ fiscal policies and enacting structural reform.

“I have made the point that Europe is growing, but starts from a position in which per capita output has remained stubbornly lower than that of the US. Per capita GDP has been about two thirds of the US level for the last 30 years,” he said.

He warned that many member countries have persistent fiscal deficits, which hamper growth and should be addressed during the current period of economic expansion.

“In many European countries, more ambitious action is needed to tackle structural deficits,” he said.

“The issue is also urgent because populations are ageing in most advanced countries and the demands on governments are likely to increase over time.”