The International Monetary Fund urged Germany to play more of a leading role in laying out a vision for the eurozone.
“Germany plays a pivotal role in the development of policies and the evolving architecture of the European monetary union,” said the IMF’s mission chief for Germany, Subir Lall, to mark the publication of the organisation’s annual report on the country.
The assessment said that “clearly articulating the shared vision for closer economic and financial integration among euro area” would give a “crucial anchor” for the expectations of households, businesses and financial markets.
Reducing policy uncertainty would aid not only the eurozone but Germany as well, with the country’s businesses adopting a “wait and see” attitude as they wait for more clarity on the euro area.
“Despite strong fundamentals, heightened uncertainty about the euro area – more so than about Germany itself – is holding back more robust growth in Germany,” the IMF said.
It also urged Europe’s largest economy to avoid unnecessary fiscal consolidation and predicted “weak economic activity in 2013” with the economy expected to expand only by 0.3 percent.
Germany’s priorities, said the IMF, include strengthening its banking system and “sustaining financial reform” at both the domestic and regional level.
The IMF’s prodding about Germany’s eurozone-level role comes as the country is increasingly focused on federal elections on 22 September.
The upcoming poll has seen Chancellor Angela Merkel – expected to be comfortably re-elected – avoid all controversial policy debates, including on establishing a banking union and possible debt relief for Greece.
The pre-election mode comes on top of years of cautiousness by Merkel when it comes to the eurozone.
Thrust into de facto EU leadership due to Germany’s relative economic strength, Merkel has often frustrated her euro counterparts with her decision-making style and her focus on fiscal consolidation.
This has now featured in domestic political campaigning.
Socialist challenger Peer Steinbrueck said that Merkel’s dispassionate approach to the EU is due to her growing up in communist East Germany.
In remarks made at a debate organised by Tagespeigel on Sunday, Steinbrueck suggested that her roots meant she was more distant from the ”European project” than politicians from West Germany.
“The fact that she until 1989/1990 had a very different personal and political socialisation than those who experienced European integration since the early 1950s… in my eyes plays a role,” he said.
Despite adding the qualifier that Merkel could not help where she grew up, Steinbrueck’s comments have been strongly criticized by other politicians for condemning people who grew in communist countries as not being able to empathise with the point of the EU.