This 2013 Article IV Consultation highlights that Germany’s economic rebound of 2010–11 gave way to weakening momentum during the course of 2012. Although exports to non-European trading partners began to recover by mid-2012, in line with improved prospects in the United States and emerging economies, exports to the rest of the euro area continued to decline as the recession in the region continued. Consumption grew robustly as German unemployment remained near post-reunification lows. The outlook for the remainder of 2013 and 2014 is heavily dependent on a gradual recovery in the rest of the euro area and a sustained reduction in uncertainty.
International Monetary Fund. Western Hemisphere Dept.
Mexico is an open economy with strong real and financial links to the rest of the world with risks of spillovers from global turbulence. Recent gains in market share in the U.S. manufacturing market are owed to improved relative unit labor costs and reemergence of a location advantage. Mexico’s current fiscal framework requires measures to offset the emerging challenges of a decline in oil revenues and the projected increase in health- and pensions-related spending. The sustained increase of bank credit after the global crisis has been reversed. The effects of migration depend on labor reform.
Belgium’s impressive past fiscal consolidation is an example for other countries that need to bring down their public debt and also provides insights on how best to address its own current fiscal challenges. Belgium has a unique history of a long and successful large fiscal consolidation. Belgium lived through various episodes of fiscal adjustment and each one of these contains important lessons for future consolidation. After Belgium’s public debt-to-GDP reached a peak of about 135 percent in 1993, it was steadily reduced to about 84 percent by 2007.
Overall competitiveness of the Dutch economy seems adequate, but domestically produced exports have lost market share recently. Over the past three decades, globalization has greatly influenced economies as countries have become more integrated. Empirical studies on business cycles synchronization and transmission of shocks among countries have provided conflicting results. In its descriptive part, this study concludes that Dutch export competitiveness is not a problem so far. This also finds that the Netherlands is relatively more exposed to supply-driven shocks while Germany is more exposed to demand-driven shocks.
The Greek economy showed strength supported by solid gains in employment, substantial real wage increases, low interest rates, and rapid credit expansion. Executive Directors appreciated the performance of the banking system and welcomed the Bank of Greece’s efforts to strengthen provisioning requirements and lending standards. Directors welcomed the balanced budget and product market reform and stressed the need to improve tax administration. They advised that sustained fiscal consolidation is helpful for safeguarding debt sustainability. Directors emphasized for a budget framework to guide fiscal strategy and prioritize policy objectives.