Managing Director's Opening Remarks for Press Conference following the June 2023 Eurogroup Meeting

IMF News, June 16, 2023

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Canonical URL: Managing Director's Opening Remarks for Press Conference following the June 2023 Eurogroup Meeting

Date: June 16, 2023
The EU Parliament’s adoption of the Artificial Intelligence Act is welcomed.
AI described as having "enormous promise and potential" and the need to ensure it "works for all" and that "the use of AI is safe."

The Euro Area economy has shown "remarkable resilience" after Russia’s invasion of Ukraine and "the largest trade loss in decades."
The economy "slipped into a mild technical recession in early 2023."
"Economic activity will only pick up very gradually going forward."
"Inflation has started to decline from historically high levels, but is still well above target."
"Uncertainty remains elevated, with risks are skewed to the downside for growth and to the upside for inflation."

Top priority: "keep bringing inflation down to target, while preserving financial stability."
Monetary policy:
- "Monetary policy should continue to tighten and then remain in restrictive territory for a period, to keep inflation expectations firmly anchored."
Fiscal policy:
- "The current economic conditions also warrant a tight fiscal policy stance over 2023-24 which would reduce overall demand, lessen the upward pressure on interest rates, and thus help lower the risk of financial market disruptions."
Financial stability and supervision:
- The banking system "appears to be resilient at the aggregate," but tightening financial conditions can expose vulnerabilities.
- Supervisors should "continue to assess banks’ exposures to interest rate, funding, liquidity, and credit risks—including those related to real estate."
- Strengthening the Euro Area financial architecture is required, including:
- "faithfully implementing Basel III"
- "making meaningful progress on the Banking and Capital Markets Unions"
Governance:
- Emphasis on "a swift agreement on the EU economic governance reform to anchor fiscal policy as early as of 2025 and ensure that member states’ public debt is on a firmly sustainable path."

Leaders should "continue to make strides in creating the conditions for a greener, stronger, and more resilient economy."
Structural policies should "deliver on the EU’s ambitious green transition and energy security plans," described as "mutually reinforcing goals."
Subsidies:
- "Subsidies should be deployed carefully, targeted to areas with the greatest climate benefits."
Capital Markets Union:
- Progress is "key" to help "mobilize funding in the EU for innovation and green transition."

"Timely implementation of the Recovery and Resilience Plans would not only help boost resilience and growth but would also help the EU achieve its green objectives much faster."

The Euro Area has "considerable agility and resilience" and, with "the right economic policy and with continued collaboration and strong solidarity," can build "an economy that is more resilient, sustainable, and inclusive."

Managing Director's Opening Remarks for Press Conference following the June 2023 Eurogroup Meeting (As prepared for delivery, June 16, 2023).