Eurozone Economy Is Under Attack And EU Hurt

The success of the referendum in Europe at the end of last month led to a serious impact on the euro area economy, slowing regional economic growth and reducing the overall economic growth forecast for the euro area in the next two years.

In the face of the current challenges, IMF urged a strong combination of actions to stimulate economic growth and consolidate solidarity in the euro area. Meanwhile, it warned that the economic recovery in the euro area may not have reached the "satisfactory" level; euro zone policy should give priority to structural reform, strengthen investment and fiscal stimulus, implement positive monetary policy, improve banking alliance and supplement balance sheet; if there is no decisive measure, the euro area may become unstable and endanger market confidence in the region.

IMF said in the report that although the recent downturn in oil prices and loose

The euro zone's economic recovery has been revived, but the British "off Europe" referendum will seriously affect the economic development prospects of the region; affected by the negative prospect of the referendum in the UK, the euro zone's GDP growth forecast will be increased to 1.6% in April, 1.5% in April, and the growth rate of the euro area will be reduced to 1.4% next year, and 1.6% in April.

IMF also warned that inflation expectations in the euro area were still "pretty sluggish", lower than the 2% medium-term target set by the European Central Bank, despite the rebound in energy prices.

Inflation is expected to rise from 0.2% this year to 1.1% next year. Overall, downside risks of inflation are rising, both within and outside the euro area.

IMF further indicated that downside risks from outside may form a proliferation mechanism and adversely affect domestic demand driven economic recovery. The downside risks from various countries are mainly due to political factors: a series of effects brought by Britain's disengagement from Europe, and the influx of refugees and rising concerns about security problems will lead to an increase in uncertainties and influence.

Growth is a drag on the implementation of structural reform policies.

Other risk factors include the weakness of financial institutions such as banks in some countries.

In addition, the slow economic and inflation growth in the long term also makes the euro zone economy more vulnerable, and in the face of shocks, policy cushioning is very weak.

IMF also said that the medium-term prospects of the euro area seem to be "not optimistic". The eurozone is faced with problems such as high unemployment, high public and private debt, and structural problems. These problems will have a serious impact on the economic prospects of the euro area. To overcome the inflation problem facing the euro area, a comprehensive and balanced policy is needed to boost growth, rebuild buffer and strengthen integration in the euro area.

IMF further states that structural reforms in the euro area can increase productivity and reduce macroeconomic imbalances; especially after financial and economic assistance, some of the reform policies encouraged in the euro area need to be stimulated; in view of the limited fiscal stimulus level at the national level, the euro zone's fiscal stimulus policy is particularly necessary, but at the same time, it is necessary to strengthen guidance to ensure that Member States comply with financial and structural rules. These measures can fill gaps in fiscal and monetary policies and make policies more balanced.

IMF further said that the European Commission is now in a difficult position: the agency is trying to make all countries in the euro zone abide by the budget debt rules, that is, the debt amount is not higher than 3% of GDP, which is due to the vigilance of the "anti EU" trend of Member States and will cause economic pressure to those countries that have just experienced financial crisis and are now in the recovery mode.

The European Commission has already said that Portugal did not cut its excess debt before the deadline of 2015, and Spain could not do this before the deadline of 2016. As the vice chairman of the European Commission, East Broff, Keith said, for many reasons, the acceleration of economic growth and the low interest rate did not make up for deficit and debt. Now, the formal fiscal investigation has been launched on the deficit of the two countries, and may eventually impose a fine on the two countries.