European policy makers must take decisive and sustained actions to strengthen the continent’s prospects for growth and avoid the risk of stagnation, one of the International Monetary Fund’s top officials said on Thursday.
Speaking from London, First Deputy Managing Director of the IMF David Lipton praised “the important steps taken by the euro area” to address the crisis and urged further reforms “if Europe is to place the crisis in the rearview mirror and finally return to growth and job creation.”
The risk of stagnation is not remote given the anemic growth, fragmented markets, impaired balance sheets and half-baked reforms, said Lipton while urging the European Central Bank (ECB) to introduce some “unconventional” steps to target problem countries.
“Lending is sluggish and is something the ECB should look at. They have to consider whether their policy tool kit has ways to address either regional or central aspects of the fragmentation,” he said.