FRANKFURT (MNI) – Growth prospects for the Eurozone will remain
subdued in coming years amid ongoing deleveraging and as countries look
to correct past imbalances, European Central Bank Executive Board member
Peter Praet said in a speech posted on the ECB’s website Friday.
“In the euro area, an average annual real GDP growth rate of just
0.5% has been achieved since 2007 and growth prospects remain subdued
for the years to come,” Praet said in a speech that was given at a
financial forum in Genval, Belgium, on September 27.
“After several years of very low growth, many advanced economies
face challenges in restoring growth prospects and achieving a
sustainable and enduring recovery,” he added.
Praet insisted that “progress is underway” in overcoming the debt
crisis in Europe but that many countries would continue to face
challenges including ongoing deleveraging in the financial sector and
efforts to restore competitiveness.
Praet said cutting labour costs and excess profit margins was
“particularly urgent” to boost employment in countries with high jobless
rates.
“There are still substantial needs for rebalancing, many countries
need to introduce further measures to increase both price- and non-price
competitiveness and to foster job creation and reduce unemployment,” he
said.
Praet also said he sees “significant progress” in fiscal
consolidation, especially in peripheral EMU members, but said there was
a growing risk of populations growing tired of the reform process.
“One risk is the increasing likelihood of consolidation fatigue
following the strong adjustment that has already taken place in many
countries. To minimise this risk and to maintain social and political
cohesion the right composition of measures should be chosen, protecting
the most vulnerable members of society,” Praet said.
— Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com —
[TOPICS: M$X$$$,M$$EC$,MGX$$$,MT$$$$,M$$CR$]
