ECONOMY

Almunia is optimistic over eurozone recovery

BRUSSELS (Reuters) – Europe’s recovery will stay on track and global growth will remain strong despite buffeting from the oil and foreign exchange markets, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said yesterday. «Despite the downside risks from high and volatile oil prices and recent exchange rate movements, we can remain confident… that global growth will continue to be strong and the recovery in Europe will stay on track,» Almunia told a business seminar. The European Commission sees global growth at 4.5 percent this year, unchanged from 2005, with eurozone growth rebounding to 2.1 percent from last year’s 1.3 percent. Some economists are concerned that the recent strengthening of the euro against the dollar could make European exports less price-competitive and therefore hurt growth as companies and consumers already have to cope with expensive energy. Almunia also called for structural reforms to European economies so they can take better advantage of globalization. «We need to strengthen our economic and monetary union by fostering an open and dynamic single market,» Almunia said. «We need to step up the implementation of a comprehensive set of structural reforms in product, services, labor and capital markets,» he added. Many eurozone countries have shied away from far-reaching reforms, such as labor and services liberalization, that economists say are needed for the region to catch up economically with the United States. Progress on the European Union’s flagship economic program, the Lisbon Agenda, is slow because of fears that many of its measures might prove unpopular among voters. The secretary general-designate of the Organization for Economic Cooperation and Development, Angel Gurria, told the conference that Europe was lagging behind the United States in productivity, partly because Europeans worked shorter hours. He said European politicians needed to explain the need for reforms better and push ahead more quickly with creating a single European market. «Politicians normally are afraid of reform because they say they do not want to commit political suicide and some genuinely fear that they are threatening their egalitarian state,» Gurria said.