“Europe is resilient in the face of geopolitical developments and successive shocks and, for the first time in a long while, has the political will to move forward with reforms such as the Capital Markets Union and Banking Union.”

The remarks were made by Greece’s Minister of National Economy and Finance and Eurogroup President, Kyriakos Pierrakakis, during a discussion with International Monetary Fund (IMF) Managing Director Kristalina Georgieva at the main panel of the IMF’s annual meetings in Bangkok. The discussion focused on building resilient and dynamic economies for the future.

The panel also included Thailand’s Deputy Prime Minister and Finance Minister, Eknito Nitithanprapas; Argentina’s Minister of Economy, Luis Caputo; and Nigeria’s Central Bank Governor, Olayemi Cardoso.

“We are monitoring developments, but we are not on alert,” Pierrakakis said, adding that the foundations of the European economy were strong and that, if there were one word to describe it, that word would be resilience.

There were problems, he acknowledged, including fragmentation of the single market, high energy prices and substantial investment needs, as well as pressures on public finances. At the same time, however, European banks were better capitalised than before, and the institutional framework had also improved.

He referred to the agreement reached at the latest Eurogroup meeting on unified supervision of European capital markets, noting that more progress had been made over the past 10 months than in the previous 10 years. He expressed optimism that similar progress could be achieved on banking union.

Pierrakakis stressed that there was a shared understanding of the need to create “European champions” across all sectors of the economy to close Europe’s productivity gap, which he described as its biggest problem. Over the past 30 years, he said, productivity in the United States had grown at an average annual rate of 1.8%, compared with 1.1% in Europe. As a result, European productivity now stood at 75% of the US level, down from 90% in 2000.

Turning to public finances, he noted that the European Union’s average deficit currently stood at 3.5% of gross domestic product (GDP), compared with 1.7% a decade ago. He also stressed that the new environment of higher sovereign bond yields was making the situation more difficult.

Today, he said, only five EU countries are running a surplus: Greece, Cyprus, Portugal, Ireland and Denmark.

Greece’s message, he added, was that fiscal discipline is a prerequisite for growth, alongside the implementation of reforms that have both national and European dimensions.

At this point, the IMF managing director praised Greece, noting that it had moved quickly to repay its loans from the Fund ahead of schedule and was financing the provision of technical assistance to other countries to support their development.

Pierrakakis added that the Greek government wanted to deliver a positive surprise by achieving a higher growth rate next year than forecast by the IMF, which traditionally takes a more conservative approach to its projections.