Weekend Read: Georgieva on Deepening the European Market | Gopinath on Sri Lanka's Debt Restructuring | F&D Magazine: Europe's Innovators

In today's edition, we highlight:

• Georgieva on deepening the European Single Market

• Gopinath on lessons from Sri Lanka's debt restructuring

• Europe's innovators are waking up

• G20 Data Gaps Initiative global conference

• Podcast on growth prospects in an aging world, and more

EUROPE

Georgieva on Deepening the European Single Market

Across the globe, countries and regions are on the move, pushing toward higher competitiveness, more dynamism, and faster technological transformation. For Europe it is very simple: either act, or risk getting sidelined, said IMF Managing Director Kristalina Georgieva in Luxembourg this week.  

Addressing the Eurogroup Meeting, Georgieva warned that there is no time for delay.

“Europe has defined a strategic agenda with single market integration at its core, yet also bringing in national reforms and a bolder vision for the EU budget. Today I will sum this up in a three-point approach—single market, national reforms, and the EU budget—where the strength of each piece rests on the strength of the others.”

“Europe has all the assets it needs—the savings, the skills, and the technology,” Georgieva continued. “It falls to Europe’s policymakers to push—nationally, collectively, and decisively—to mobilize these assets to their full potential. The people want a Europe that creates high-value jobs, innovates, and generates cutting-edge products and services. They want opportunity. It is within reach,” she said, noting her confidence that this could be done, because Europe has done it before.

Read the Managing Director’s remarks at the press conference following the Eurogroup meeting.

SRI LANKA

First Deputy Managing Director Gita Gopinath on Lessons from the Country's Recovery

Sri Lanka has made remarkable progress in a very short time given the severity of the crisis the country experienced three years ago, said IMF First Deputy Managing Director Gita Gopinath in Colombo this week. Speaking at a conference organized by the IMF and the Central Bank of Sri Lanka, Gopinath urged the authorities to sustain the reform momentum in a manner that is inclusive and accountable.

“Thanks to bold reforms and the commitment of the Sri Lankan people, substantial progress has been made to restore macroeconomic stability and reduce hardships faced by people. Fuel, cooking gas, and medicines are available again," said Gopinath. "Inflation has been brought under control and economic growth has returned—expanding by 5 percent in 2024. On the fiscal front, the government has achieved an extraordinary adjustment and tax revenues have increased by more than two-thirds as a share of GDP."

The government has also put a strong emphasis on improving governance, which is fundamental for establishing trust with citizens and ensuring sustained growth, she noted. Important milestones have been achieved including central bank independence, improving public financial management, and strengthening the legal framework for anti-corruption. Sri Lanka also took the difficult but necessary decision to default on its public debt and pursue a sovereign debt restructuring, she said, noting that these decisive actions on debt have helped ease the burden on the country.

F&D MAGAZINE

Europe's Innovators are Waking Up

“The US innovates, China replicates, Europe regulates” is how critics summarize the continent’s approach to innovation. Exhibit A of the European Union’s regulatory overreach is the now infamous Artificial Intelligence Act, which governs AI—even though the region has not yet produced a single major player.

Productivity in US technology firms has surged nearly 40 percent since 2005 while stagnating among European companies. US research and development spending as a share of sales is more than double what it is in Europe. No European company ranks among the 10 largest tech companies by market share.

Yet reality, as usual, is more nuanced, according to Alessandro Merli, an associate fellow at the Johns Hopkins University School of Advanced International Studies Europe, writing in F&D.

Europe’s innovation scene comes in various shapes and sizes. Many of its tech companies are now global household names: Spotify and the 'buy-now, pay-later' fintech firm Klarna, from Sweden, and the British digital bank Revolut. Skype, which owner Microsoft recently retired, was founded in London by four Estonians, a Dane, and a Swede. One of its first employees, Estonian Taavet Hinrikus, cofounded Wise, a money transfer company.

“For the first time, the EU Commission has a commissioner dedicated only to start-ups, research, and innovation,” says Francesco Cerruti, director general of Italian Tech Alliance. “But there is a need for translating words into action. And fast.”

DATA TECHNOLOGY

G20 Data Gaps Initiative Global Conference

Over 130 officials from G20 and non-G20 economies, the IMF, and other international organizations gathered in Cape Town, South Africa, from June 17–19 for the G20 Data Gaps Initiative (DGI) Global Conference. The event highlighted the significant progress achieved under the third phase of the DGI in addressing critical data gaps.

IMF Chief Statistician and head of the Statistics Department Bert Kroese highlighted the DGI’s pivotal role in equipping policymakers with timely and essential data since its inception in 2009, made possible through robust international collaboration. He further underscored the importance of leveraging the initiative’s strategic relevance and agility to continue advancing the global statistical infrastructure.

IMF PODCAST

Most advanced economies are witnessing their populations age and labor forces shrink, and the same trend is expected to hold for the largest emerging economies within the decade. So the largely touted demographic dividend of previous decades is making way for a demographic drag. Diaa Noureldin is an economist in the World Economic Studies division in the IMF Research Department. In this podcast, he says healthy aging and policies that keep people in work longer could offset the demographic drag on growth. 

Thank you again very much for your interest in the Weekend Read! Be sure to let us know in the comments what issues and trends we should have on our radar.

Miriam Van Dyck

Editor, IMF Weekend Read