Rapport OESO: herstel eurozone blijft achter (en)

EUOBSERVER / BRUSSELS - Sluggish growth and stubbornly high unemployment await the 12 countries that share the euro, according to an OECD report published on Tuesday (27 July).

The OECD annual report on the euro zone projects growth of 1.5 percent this year, which should "gather steam" to 2.5 percent next year.

However, the report warns that "income per capita is lower in the euro area than in the best performing OECD countries and the gap is widening".

Moreover, the economic recovery is expected to be slower in the euro zone than in other parts of the world, according to the Paris-based body.

"While it is not surprising that the euro area went into a downturn following the 1995-2000 upswing, it is striking that growth has been recovering much more hesitantly than in many other OECD countries", notes the survey.

There are also notable gaps in income and growth between countries in the euro zone, says the OECD.

"Economic performance across the individual economies has differed considerably with activity in German and Italy subdued, but strong in some smaller countries".

Stubbornly high unemployment

The outlook is not much rosier for other economic indicators, especially unemployment which "is projected to stay stubbornly high".

Unemployment in the euro area is currently just below nine percent.

And the euro has not brought the hoped-for gains, says the report. "The closer integration that monetary union was seen as bringing has not yet translated into any visible strengthening of trend growth or increased dynamism".

However, one bright spot is that inflation is set to ease slightly - to below 1.5 percent. This should reduce pressure on the European Central Bank to cut interest rates from their already historically low levels.

And export levels are being pushed higher by a rebound in world trade, although the report warns that the forces shaping the recovery in the euro zone "are rather uneven".

Recommendations

The OECD suggests several measures that need to be taken immediately to resolve the economic problems faced by the euro zone.

The 12 countries are urged to adhere more closely to the rules underpinning the euro - which cap budget deficits at three percent of GDP.

Labour mobility - making it easier for workers to move from one country to another - needs to be increased to strengthen economic integration between euro zone members.

The report also calls for a deepening integration of markets for goods, services and financial services in a bid to "raise the area's growth potential".