OECD: Economic recovery in euro zone is genuine
Paris (dpa) - The economic recovery for the now 13-member euro area has taken hold and could become durable and self-sustaining, the Organization for Economic Cooperation and Development (OECD) said in its Economic Survey of the Euro Area, issued Thursday in Paris.
"Activity was strong in 2006, firms and households are more confident about the future, business investment has picked up and unemployment has fallen below 8 per cent for the first time since 2001," the OECD said.
The recovery has been broad-based, with the economies of most member countries growing at what the OECD described as "a healthy pace."
In addition, while business and consumer confidence have eased somewhat from their peaks in mid-2006, they remain relatively high, the organization said.
"Incoming orders are strong and employment expectations are healthier than they have been for many years," the report said.
The recovery will become more permanent, the organization noted, if countries are willing to continue structural reforms, "especially those focused on boosting labour participation, competition and innovation. These are needed to address the euro area's Achilles heel: slow potential growth."
However, the OECD cautioned that the good news must be kept in perspective, since the GDP growth of 2.25 per cent projected for 2007 and 2008 for the euro zone "is still modest by OECD standards."
In addition, risks to the recovery remain. According to the OECD, these include "a sharper-than-expected slowdown in the United States, another jump in oil prices, a slump in construction activity if housing markets deteriorate and an abrupt appreciation of the euro if global current account imbalances trigger a realignment of exchange rates." // © 2006 DPA
Comments