With the recent financial crisis engulfing the world, the global economy is gradually gaining momentum, according to OECD’s latest Economic Outlook.
In her remarks today at 22nd Global Summit of Women Athens in Greece, Deputy Assistant Secretary Deborah A. McCarthy stressed that despite with the slow growth, the recovery is fragile, extremely uneven across different regions, and could be derailed by what nearly every global outlook.
“With slow growth, high unemployment and limited room for maneuver regarding macroeconomic policy space, structural reforms are key means to spur growth and boost confidence.” -Ms. McCarthy
She cites that just recently, World Bank President Robert Zoellick said, “All countries need to focus on the structural reforms like the microeconomic policies that will drive future growth.”
Such changes are essential to enhancing productivity, competition and innovation ” whether it’s so that Europe can regain its economic performance, or China can avoid the so-called “middle income trap,” she noted.
Ms. McCarthy cites that nevertheless, the mixture of low growth, aging populations, structural inefficiencies, and high government debt load is giving policymakers difficult choices to make to try to balance fiscal restraint with growth-enhancing measures.
Finding a careful balance between spending cuts and revenue increases is critically important, she underlined.
She states that the reform agenda must also be specifically targeted at supporting employment, reducing inequalities and protecting the weakest segments of the population.
“My country is not immune to this dilemma. We too face the same choices.” -Ms. McCarthy
At the forum, Ms. McCarthy also some trends apparent in Europe, which will need resolution for the crisis to end.
She highlighted that a stable, growing European economy is essential for a thriving global economy.
“Europe has taken significant steps to manage its financial crisis, but there is more work to be done.” -Ms. McCarthy
Business confidence has continued to deteriorate in the eurozone, she added.
Confidence in the financial sector is also eroding, she highlighted.
She notes that government debt sustainability is one concern that is pulling down market and investor confidence in the region.
Recent Eurostat figures illustrate some of the other underlying issues, she reported.
In the first quarter of 2012, overall GDP growth in the euro area was flat at zero percent, Ms. McCarthy noted.
Germany boasted growth of 0.5 percent while the others such as Portugal, Spain and Italy, all posted negative growth figures, she said.
“Some have called Germany “Europe’s engine for growth,” but it is not the only one.” -Ms. McCarthy
She cites that Baltic and Nordic countries report strong economic growth.
In addition, Turkey and Poland also have positive GDP forecasts.
She says back in March, there was optimism that Europe had turned the corner and the crisis was near resolution.
“Unfortunately, recent events have again reminded of the fragility of our global economic recovery.” -Ms. McCarthy
Ms. McCarthy pointed out that Summit offers an opportunity to foucus on strengthening the fundamentals of the economy, invest in infrastructure, foster private-sector development, expand markets at home and abroad, and encourage new and “green” technology.