Christine Lagarde addressed Europe’s role in global economic imbalances, emphasizing that the euro area is not a key source of global imbalances and its contribution has been steadily declining. Europe’s current account surplus, now around 2% of GDP, largely reflects demographics, structural factors, and past policy choices, while bilateral surpluses with the US are partly driven by European affiliates of US multinationals.
She highlighted that Europe’s surplus is shrinking due to fading historical drivers, such as real exchange rate advantages and fiscal consolidation, while fiscal policy is becoming more supportive, notably through infrastructure and defense investments. Lagarde stressed that coercive US trade measures would be ineffective, potentially counterproductive, and that strengthening domestic demand and intra-European trade offers a powerful buffer against external shocks.
In conclusion, Europe should be seen as a stable and trusted partner in global trade, leveraging the Single Market and strategic alliances to promote resilience, free trade, and mutual economic benefits, rather than being unfairly targeted or forced into inefficient reshoring policies.
