It is a great pleasure to have the opportunity to address this Informal ECOFIN. I’d like to thank the Latvian Presidency for inviting me to speak to you and for their excellent leadership.
Last time I addressed the Committee in November 2013, we were still in crisis mode. Two weeks ago, the OECD released its Interim Economic Outlook and it seems that the Spring of 2015 has brought encouraging signs for the global economy. Lower oil prices and widespread monetary easing have raised the potential for the acceleration of growth that is so needed in many countries, especially in Europe.
Low oil prices and monetary easing are boosting growth in the world’s major economies, but the near-term pace of expansion remains modest, withabnormally low inflation and interest rates pointing to risks of financial instability, according to the OECD’s latest Interim Economic Assessment.
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This country note from Going for Growth 2015 for the European Union identifies and assesses progress made on key reforms to boost long-term growth, improve competitiveness and productivity and create jobs.
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The global economy continues to run at low speed and many countries, particularly in Europe, seem unable to overcome the legacies of the crisis. With high unemployment, high inequality and low trust still weighing heavily, it is imperative to swiftly implement reforms that boost demand and employment and raise potential growth.
The EU Single Market remains fragmented by complex and heterogeneous rules at the EU and national levels affecting trade, capital, including foreign direct investment, and labour mobility.
Action taken by many European countries to return their public finances to health are beginning to pay off, says the OECD. The Euro area economies which emerged from the crisis with serious current account deficits are now in surplus. Debt-to-GDP ratios are stabilising and market tensions have abated.
Low productivity growth in the EU has deep structural causes. Strengthening human capital, work incentives and competition, and better integrating the Single Market would boost inclusive growth.
Raising euro area economic performance requires cleaning up bank balance sheets, completing banking union to foster unbiased risk assessment, further structural reforms and strong fiscal policy frameworks.
After five years of work at every level to correct the fiscal, financial and external imbalances that led to the crisis, and to reinforce fiscal and financial institutions, the Euro Area is beginning to show signs of recovery. But, despite these positive signs, growth is still weak and uneven.