Dáil Éireann Debate, Wednesday - 4 February 2015
23. Deputy Richard Boyd Barrett asked the Minister for Finance if he discussed with Christine Lagarde at their recent meeting in Dublin, economic stagnation in Europe and the IMF's downgrading of growth prospects for Europe; and if he will make a statement on the matter. [3377/15]
Amharc ar fhreagraGrowth prospects in Europe were discussed by Madame Lagarde and all participants, including myself, during the panel discussion at a conference in Dublin Castle entitled Ireland Lessons from Its Recovery from the Bank-Sovereign Loop. These discussions were streamed live by the event organisers and are available at: http://www.imf.org/external/np/seminars/eng/2014/ireland/index.htm.
The latest economic developments in the euro area have been disappointing with low growth, low inflation and an unemployment rate which is still unacceptably high. Growth in the third quarter of 2014 was weak, at 0.2 per cent on a quarterly basis.
In terms of this year, economic activity in the euro area will be supported by lower oil prices, supportive monetary policies and a depreciation of the euro. Notwithstanding these positive developments, other factors acting in the opposite direction - such as weaker investment - mean the IMF has revised down its forecast for the euro area by about a quarter of a per cent this year and next. The forecast for the UK was left broadly unchanged.
Reviving economic growth in the euro area will require a combination of monetary, fiscal and structural reform policies. In relation to the fiscal stance, a differentiated approach is needed, whereby those with fiscal space should use it. On the monetary side, I welcome the recent policy announcement that the ECB is to expand its balance sheet through large scale asset purchases, including the purchase of sovereign debt in the secondary market (quantitative easing). Finally, structural reforms are needed to unlock the growth potential in large parts of the euro area.
