Out of the 35 OECD countries, that with the second highest real GDP growth was Ireland at 4.3% in 2016, and Spain is also growing strongly, at 3.2%; the country with the lowest government debt at end-2016, was Estonia, at 9.5% of GDP; several countries in the area, including Austria and Germany, boast almost full employment, at between 4% and 6% in 2016; Estonia and Finland are among the top 3 countries in terms of science scores in the PISA test. So the euro is not to blame, it is the different national policies. Admittedly, with the euro we have lost the tool of currency devaluation. Devaluation can have positive effects in the short term as it lowers the price of exports, but, in the medium term, it can have significant negative effects: it can exert inflationary pressure via the rise in import prices; it can make the country poorer, via the reduction in the value of its assets, and conversely the increase in its external debts; and lastly, it creates the risk of a trade war, with chain devaluations, as was the case in the 1930s. On average, we have a suitable exchange rate with the euro. But no lasting success in economic history has been built on a weak currency; all have been built on a good structural environment, corporate innovation, and a high level of specialisation among firms. Italian creativity, your commercial ingenuity, dating back to Venice, Genoa and Florence, count much more than the facility of a weak lira.
However, in more recent weeks, the more positive data in the US has resulted in some flow-back to the US markets. This more variegated and dynamic landscape means financial markets are likely to remain volatile in the months ahead. We need to be prepared to manage this volatility. 9. Second, policymakers not only have to grapple with the aftermath of the financial crisis, but also the medium term structural challenges facing their countries. There are significant differences in the pattern of saving and investment across economies. Many of these reflect structural factors such as demographics, as well as the particular path of growth and development. To sustain global growth, some changes in the global saving-investment pattern will be necessary. This cannot happen overnight. Instead, we need sustained and coordinated policy action across all the major economies. The IMF and global bodies like the G20 will have to continue to focus and provide direction on these structural issues. 10. Third, the financial crisis shows how critical the nexus is between the health of the financial system and the health of the economy. Global regulatory reforms are necessary to address many of the weaknesses uncovered during the crisis. Yet, we have to tread a fine balance to build not just have a resilient global financial system, but also one that can support sustainable economic growth. Given the varying pace of economic recovery and the different phases of economic transition, regulations need to be appropriate to local circumstances, while preventing regulatory arbitrage.