Today, November 16, the IMF Regional Economic Outlook for Europe was introduced in the Hotel Olümpia conference centre in Tallinn by Juha Kähkonen, a senior advisor at the IMF's European Department, Philip Schellekens, analyst, and Luc Everaert, chief of the Regional Studies Division.
For more details regarding the economic outlook, see the IMF's web page:
www.imf.org/external/np/sec/pr/2007/pr07252.htm
www.imf.org/external/pubs/ft/survey/so/2007/CAR1112A.htm

This time, the main focus of the IMF's outlook was on the developments in global and European financial markets and on the further impact of this autumn's turmoil on the economy, especially the financial sector.

The IMF experts considered the European economy to be strong enough to handle the uncertainty it is facing. The IMF believes the current developments will not have a very strong impact on the coming years' economic growth. The setbacks to the financial markets can be viewed as a positive development: in recent years, excessive risks have been accepted, but stricter risk assessment in the markets marks a return towards a normal economic environment.

However, if negative pressures in the credit market persist, it will constitute a key downside risk to the further development of the European economy. Therefore, both advanced and emerging economies should continue to make structural reforms and to supplement the financial sector regulatory framework. In addition, it is important to maintain - and if necessary, to reinforce - the fiscal position of countries.

Several financial markets related aspects were treated as special subjects. More attention was paid to the effect of the rapid financial sector growth on both financial and economic stability - this is a very topical issue in our recent years' economic context as well. The conclusions emphasised that the integration-induced acceleration of several countries' economic growth is a welcome development, though it was accompanied by a temporary increase in current account deficit and household indebtedness. At the same time, it is important to stress that the extraordinary growth pace is not going to last forever and economic agents should be ready for a more subdued growth period. Otherwise the primary, financial sector supported growth acceleration may turn out to be too brisk and bring along great difficulties when the economy starts to equilibrate. From the economic policy point of view, the following should be done during the acceleration period: keep a strong fiscal position, continue or at least preserve the structural reforms forming the basis of success, and ensure strong financial sector supervision.