Bank of Lithuania

The IMF Regional Economic Outlook for Europe/May 2011, which was presented by the experts of the International Monetary Fund (IMF) today at the Bank of Lithuania in Vilnius, argues that the economic recovery in Europe is gaining ground, but downside risks remain.

Domestic demand is strengthening in advanced European economies, but it remains weak in the euro area periphery. As financial markets continue to be apprehensive of sovereign debt burdens and banking fragility, policy makers need to take bold steps—structural reforms, fiscal consolidation and strengthening of the financial system-to restore confidence. In emerging Europe, domestic demand is set to become the main pillar of growth this year. Even though the region so far has proved to be resilient to spillovers from the euro area periphery, it will need to continue reducing its fiscal and financial vulnerabilities and to reorient growth towards the tradable sector. It is necessary to promote financial integration and ensure more vigilance, both nationally and across the borders, when dealing with financial sector problems together with pan-European institutions.

The IMF’s Regional Economic Outlook for Europe covers the economic outlook for advanced and emerging European countries, and discusses the role of financial integration in the euro area periphery as well as in emerging European economies during the recent financial crises. The presentation, hosted by the Bank of Lithuania, was made by a team of the IMF European Department: Mr. Bas Bakker, Chief, Emerging Europe Regional Division, and Mr. Christoph Klingen, Deputy Chief, Emerging Europe Regional Division.

Representatives of the Republic of Lithuania institutions, the academic community, economic analysts, embassies at the Baltic States and central banks of Estonia and Latvia were invited to the event.

Regional Economic Outlook for Europe is prepared by the IMF experts and presented in various countries twice a year.