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Jean-Claude Trichet, the president of the European Central Bank affirmed in a speech that there must be no contentment regarding the growth within the euro-zone despite the strong performance shown recently by the economy.
Last year, Euro-zone's GDP raised to 2.9pct, which is the highest rate it has reached since 2000.
Although remarking that there is a lot of encouragement in this positive development, Trichet reminded restfullness must not exist, reminding the steps Europe still has to go through to benefit completely from globalisation and to face the challenges due to rapid changes in the technological development and in the ageing population.
He added there needs to be some decisive structural reforms in order to lift the potential of Europe up.
The President of the European Central Bank urged all the European member states to gather their strength and advance using structural reforms so that the currently witnessed economic activity in Europe be broadened and be made sustainable .
Trichet individualized a cause of the unballance in the growth potential in Europe as being the lack of structural reforms. When compared with the US and with other economic leaders, this seems to be a major problem in Europe's development, he added.
Although he admitted these reforms are not easily achievable, but went on saying that a pursue of such reforms is needed especially in dealing with the current environment, in which the European economy witnesses various challenging factors, such as the very rapid change in technology, the always accelerating globalisation and ageing populations.
Trichet also gave credit to sound fiscal policies, which are, in his opinion, vital for the euro-zone. He added that governments need to profit from the stron growth by cutting deficits.
He also added that the monetary policy of the bank he's representing helps support growth by limiting inflation fluctuations.
"Negative effects are issues a central bank must avoid, especially if caused by high inflation on long term increase and also the consequences of spontaneous and unexpected inflation must be dealt with accordingly." completed Trichet in his speech. The oscillation of inflation increases the uncertainty, in Trichet's opinion, and create a negative influence on investment and therefore on potential profit as well as on related processes.
04:04
Posted on Jul-26-2007
