Middle-east Arab News Opinion | Asharq Al-awsat

‘Euro’ Fears Decline amidst European Crises | ASHARQ AL-AWSAT English Archive 2005 -2017
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International Monetary Fund (IMF) Managing Director Christine Lagarde arrives at a Eurozone finance ministers emergency meeting on the situation in Greece in Brussels, Belgium June 27, 2015. REUTERS/Yves Herman

Cairo – With all the pressure affecting the European economy, the unified European currency has been suffering more than any other amidst warnings on the possibility of collapsing in case European leaders were not able to figure out wide-ranging solutions to save the future of their economies and currency.

Starting from Greece’s chronic debt crisis and worsening of the problems facing Italian banks and threatening the European banking sector and passing by Brexit, the Euro faced a difficult year in 2016.

All what has been facing the euro continued this year with electing Donald Trump, coinciding with the increase of dears on the future of the world economy in general, especially in light of his “protective” calls and his rejection for the free trade agreements.

Trump’s election came in line with several other elections in Europe that will be carried out this year on senior posts, most prominently in France, Germany and Holland, countries with major economies in Europe.

In circles of fears, numerous warnings were given on risks threatening the future of the European economy, which is theoretically considered the second most powerful economy following that of the United States with GDP amounting to USD16 trillion, according to the report issued by the World Bank for 2017.

In this matter, the economies of the 19 countries sharing the euro currency should converge more or they will suffer from repeated crises, the International Monetary Fund said in a regular assessment of the single currency area.

“Without more convergence, the monetary union is likely to suffer from bouts of instability,” it said.

The Fund said euro zone economic recovery was firming, forecasting growth of about 1.6 percent this year, in 2018 and 2019, but its medium-term growth prospects were weak and buffers to cushion potential risks have grown smaller.

“Countries with high public debt will face difficulty coping with higher borrowing costs when monetary policy makers begin to reduce the extent of accommodation,” the IMF warned.