Thursday, May 31, 2012

Reviving Growth in Europe

by Nemat Shafik

International Monetary Fund

Brussels Economic Forum
May 31, 2012

It is a pleasure for me to be here today, and I want to thank the organizers for inviting the IMF to give its perspective on how to revive growth in the European Union.

There is no denying that Europe today is in an extremely difficult situation. The pressure has been relentless for many months now, and it will unfortunately take further efforts to restore confidence in the European Union’s economic future. The topic of today’s conference ―finding new sources of growth―will ultimately determine whether we are successful in that endeavor.

As I was preparing for this speech, I was reminded of Robert Schuman, one of the founders of the European Coal and Steel Community. This month, 62 years ago, he and his fellow politicians issued their call for an integrated Europe, starting the process that paved the way for the European Union we know today.

Schuman’s dream was simple: He wanted an economic union, a sharing of strategic resources in Europe that would “make war not only unthinkable but materially impossible.” At the heart of his vision was the idea that economic growth and shared prosperity would finally bring peace to Europe.

By that measure the project has been a resounding success. The EU has expanded to 27 member states and the economic union has grown ever deeper, including a common market and, for 17 countries, a shared currency.

And yet, today, the crisis afflicting some members of the euro area is threatening to undo those historic achievements. So where do we stand, and what needs to be done? In the next 15-20 minutes, I will look at what we think could be done to support growth in the short term, before turning to reforms that are needed to boost long-term growth and complete the process of European integration.


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