BRUSSELS, Sept 14 (Reuters) - The euro zone may have come out of recession, but economic growth remains low and further reforms are needed to ensure a recovery fully takes hold, European Central Bank Governing Council member Luc Coene told a newspaper on Saturday.
The euro zone emerged from a 1-1/2 year-long recession in the second quarter, with growth of 0.3 percent.
Coene, governor of Belgium’s central bank, told De Standaard newspaper it was clear that growth had been better than expected, certainly in countries such as Germany and France.
“But we must put these figures in context. This is probably a temporary phenomenon. There was a long winter in the first quarter, which led logically to a one-off economic boost in the second quarter,” he said.
Coene said it was important to remember that growth as a whole was hovering around zero.
“Instead of being slightly below, we are slightly above. Europe then needs to keep reforming to make its economy competitive and innovative,” the central banker said. “We cannot just say that the economy has taken off. That’s also the case for Belgium.”
Belgium is one of very few euro zone countries to have an economy stronger now than before the crisis struck. Coene said this was partly due to the country’s system of wage indexation, which had left purchasing power intact.
“But we must not be complacent. All other countries are busy with fundamental structural reforms, except Belgium. If we do not reform or do so insufficiently, we risk being left behind,” he said.
Despite supporting Belgium during the crisis, Coene said Belgium’s high wage costs, along with a public sector debt about the size of its annual economic output, were issues the country needed to address.
“Both are linked to each other. The more people we get to work, the easier it will be to fund government finances,” he said.
“It is not a coincidence that Belgium is the country with the highest wage costs per hour and that at the same time we are the country with the fewest people working.”
Coene said all countries, except Belgium, were busy carrying out fundamental structural reforms.
“If we do not reform or do so insufficiently, we risk being left behind,” Coene told the newspaper.
“Compare it with a cyclist who breaks away from the peloton too soon and must push into the wind. As soon as the peloton really starts to ride, Belgium risks being caught up and mercilessly ridden out of its wheels.”