EU's Rehn sees European recovery strengthening in 2014

ALPBACH, Austria Thu Aug 29, 2013 8:24am EDT

European Economic and Monetary Affairs Commissioner Olli Rehn attends a news conference about the convergence report for Latvia at the European Commision in Brussels June 5, 2013. REUTERS/Laurent Dubrule

European Economic and Monetary Affairs Commissioner Olli Rehn attends a news conference about the convergence report for Latvia at the European Commision in Brussels June 5, 2013.

Credit: Reuters/Laurent Dubrule

ALPBACH, Austria (Reuters) - The fragile European economic recovery seen in the second quarter should continue into next year and become more solid, the European Commission's top economics official told Reuters on Thursday.

Olli Rehn said greater fiscal credibility in euro zone countries, action by the European Central Bank to stabilize markets and better economic governance had all strengthened the currency bloc's ability to withstand political shocks.

"The euro zone is less sensitive to political turbulence," Rehn said in an interview, contrasting its current state with its previous greater vulnerability to derailment by such upsets as Italian and Greek political turmoil or the Cyprus debt crisis.

"The recent both hard data and soft indicators on consumer confidence and purchasing managers' expectations are supportive of a subdued sort of recovery this year and a somewhat more solid recovery next year," he said.

"Not brilliant, but nevertheless a more solid recovery. And we should see next year also more improvement in employment," Rehn said on the fringes of an economic conference in the Alpine village of Alpbach, Austria.

Rehn had told reporters earlier there were signs of a gradual recovery in the euro zone but it was premature to say the crisis was over.

He added that Greece was making good progress but a decision on whether Athens may need a third bailout could not be made until the so-called troika of its international creditors completed an assessment in late September and early October.

"Its economic reforms are moving forward better than in the first two years of the reform program because there is now broader - not full, but broader - consensus in Greek society for reform," he said.

German Finance Minister Wolfgang Schauble said earlier this month that Greece would need a third bailout, a statement that prompted an outpouring of officials saying nothing was planned yet.

(Additional reporting by Angelika Gruber Editing by Jeremy Gaunt)

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Comments (2)
dareconomics wrote:
Ollie Rehn has been predicting growth or strengthening growth in the Eurozone since it entered recession. Eventually, he was right, and it took less than two years. Read the article carefully. He trumpets some bureaucratic victories and cherry-picked data as evidence for his prediction. How about this evidence?

Businesses have no money to invest to spur growth due to tightening standards from zombie banks:

(Eurozone Outstanding Loans to the Private Sector)

Consumers have no money to spend; retail sales have been declining for two years save for one month:

(Eurozone Retail Sales YoY 08.2013)

When Ollie Rehn cheerleads the Eurozone economy, he conveniently ignores the situation on the ground in Greece and Cyprus, whose economies are dissolving, and in Spain and Italy who are not too far behind.

The Eurozone is suffering from a lack of demand, which will suppress growth for the next few years, no matter what the alphabet soup of Brussels says or does.

For complete post including charts, images and links: ‎

Aug 29, 2013 1:17pm EDT  --  Report as abuse
Alexaisback wrote:
dareconomics hits the nail on the head.

I enjoy reading it.

Aug 29, 2013 3:04pm EDT  --  Report as abuse
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