The Organisation for Economic Cooperation and Development (OECD) has warned that while most of Europe’s economies are growing again, they still face daunting challenges including high youth unemployment.
In two surveys launched this week – the Euro Area Survey and the Economic Survey of the EU – the organisation warned that the region needs to implement policies to reinforce sustainable economic growth and tackle inequality.
Presenting the findings Angel Gurría, secretary-general of the OECD, pointed out: “After many years of great difficulty, our efforts are beginning to pay off. By now most EU countries are recording positive - albeit low - growth rates. Current account imbalances have narrowed or become positive, financial market conditions are improving, and tensions have abated in European sovereign debt markets.
“But the scars of the crisis still run deep. Europe has been left with high and rising nonperforming loans, fragmented capital markets, and negative feedback loops between sovereigns and banks, which are taking a toll on credit. Unfortunately, Europe cannot rely on a strong push from the rest of the world to drive growth.”
The OECD highlighted three key areas to promote sustainable growth: macroeconomic policies that support growth and stability; financial sector reforms that revive credit growth; and labour and product market reforms that strengthen competition and mobility.
Mr Gurría pointed out in his speech that while there has been “substantial progress” in fiscal consolidation, government debt remains high in many periphery countries with a debt-to-GDP ratio exceeding 170 per cent in Greece, 130 per cent in Italy and 120 per cent in Ireland and Portugal.
He added: “This means that continued consolidation is needed to move closer to the 60 per cent Maastricht target over time, and that almost all countries will have to maintain tight budget positions for years to come.”
