“Optimism” and “confidence:” ECB and IMF urge eurozone to invest in itself

Brussels – One should not be afraid: the present and especially the future should be approached with “optimism.” That is the word that the President of the European Central Bank, Christine Lagarde, uses in summarizing the way forward. She explains to the World Economic Forum audience in Davos that we should not live with the worry of what will happen, . “What are we good at in the EU?” she asks and wonders. “In having a deficit at 3 percent, in not having high debt levels, in having inflation at 2.4 percent and that we expect to fall.” Not only that, “When I see the eurozone, I see a lot of savings and a lot of talent.”

The best response also to the challenges coming from US President Donald Trump is “optimism.” Lagarde does not deny that amid geopolitical tensions and potentially adverse economic conditions, “what happens outside the eurozone is a challenge. However, it is also an opportunity.” Of course, there will be work to do because, she acknowledges, “the EU does not function as a true single market. However, the EU is not a myth. It is an opportunity for transformation.” There are, around the EU and its eurozone, “existential threats,” but there are tools and fundamentals to “respond to the warning signs.”

However, the European project needs more conviction and self-confidence. In this regard, the Managing Director of the International Monetary Fund, Kristalina Georgieva, tries to play the role of a motivator: “The United States has a culture of confidence, Europeans has a culture of modesty. My message to the Europeans is: more confidence.”

The Fund director’s invitation is not just circumstantial. She recalls that in the past, when faced situations of high inflation, the response would “require interest rates to go up and the response would be that inflation did go down but at the price of recession.” This time, however, the situation is different. “This time we have growth,” Georgieva stressed. It may not be robust growth, but it is there. It is also thanks to the answers the eurozone has been able to give itself after the euro crisis. “The difference from other times is that there is policy coordination.” For the EU and the eurozone, it means the stability pact, the fiscal compact, and the European semester, the cycle of coordination of member states’ economic policies. Georgieva urges to move forward in this regard.