Strong eurozone growth continues
Ireland remains a star performer having increased its budget surplus, together with Spain and Finland, and its growth has been persistently above the average, as has its inflation, the European Commission’s six-monthly report on the eurozone said.
The euro’s global weight has grown too, with about 50 countries using it as the reference currency in their exchange rate regimes while 38.3% of short-term international debt securities in euro, surpassing the share of the US dollar.
European Economic and Monetary Affairs Commissioner Joaquin Almunia said it was time the eurozone had a seat on the International Monetary Fund, where they could have one voice and not be seen as divided in any way.
The now 13-member euro area grew by 2.7% in 2006, its fastest growth rate since 2000, and well above its long-term average. Employment growth accelerated to around 1.5% giving an increase of close to two million new jobs and inflation remained around 2%.
These achievements put European Economic Union in a strong position to face the challenges such as raising potential growth and enhancing adjustment to economic shocks, said Mr Almunia.
But this was not the time for countries to rest on their laurels, he warned.
“Policy makers must strike while the iron is hot. They should put public finances on a firmer footing, implement reforms that will increase the euro area’s growth potential and show leadership on global issues.”
One of the greatest challenges countries must now prepare to meet is the aging population, as inside the next 50 years there will be only two persons of working age for every senior citizen.
“If current trends and policies continue, potential growth in the euro area will be reduced from above 2% in the period up to 2010 to around 1% on average during 2031 to 2050”, he said.
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