Also, although we believe that the Fund should be more explicit about the reasons why its recommendations may not deliver the expected outcomes, we note that this should not be interpreted as, nor convey the message that, the Fund’s recommendations are always correct or that member countries’ authorities always take a defensive attitude. We believe deeply in a policy dialogue process that could be beneficial to both parts. At the end, successful policies are those implemented by economic authorities that feel them their own and are capable to create the political framework for their execution. We also support a more systematic focus of the Fund’s surveillance on regional developments by detecting regional trends and fostering dialogue with region-wide institutions such as ECLAC. Along  2  BIS Review 2/2007  these lines, we appreciate the Fund’s regional outlook report, whose last issue was simultaneously launched in Mexico City and Santiago in early November. As a Central Bank fully committed to an inflation-targeting framework, we place substantial weight on making continuous efforts in strengthening transparency. In this direction, we think that the Fund’s communication strategy would be more effective if analysis goes beyond the mere publication of reports, making it an integral part of the public debate on policies and economic reforms. Considering the importance of communications, we believe that enhancing the Fund’s outreach activities both at global and regional level will strengthen the effectiveness of the Fund’s monitoring and surveillance.
This assessment will be informed primarily by our staff macroeconomic projections, on which all data are incorporated in a coherent manner. In this regard, the staff March forecast pointed to a weakening of activity in 2023, with real euro area GDP expected to grow by 1% in 2023 (compared with 3.6% in 2022). This scenario is somewhat more optimistic than that of the previous projections (published in December), reflecting better than expected recent economic data and the fall in the cost of energy, so that real income losses are lower. Growth is expected to pick up, to 1.6%, 1  See “An overview of the ECB’s monetary policy strategy”. 1  in both 2024 and 2025, based on a robust labour market, improving confidence and the recovery of purchasing power. However, these growth rates are lower than projected in December owing to a stronger tightening of financial conditions, including a larger appreciation of the euro exchange rate. And, in any case, the accumulated growth path expected now for 2022-2024 is significantly lower – around 2.5% lower – than that projected in December 2021, before the war in Ukraine, reflecting the material deterioration of euro area terms of trade. On inflation, the baseline scenario is one of gradual convergence of inflation to our 2% target. After peaking at 10.6% in October last year, HICP declined to 6.9% in March this year, according to the flash estimate, on the back of lower energy prices and base effects.