Table of Contents

The Economic Potential of a Larger Europe

The Economic Potential of a Larger Europe

Edited by Klaus Liebscher, Josef Christl, Peter Mooslechner and Doris Ritzberger-Grünwald

The Economic Potential of a Larger Europe gives insights into past, present and future issues related to the ongoing EU enlargement process. Providing a unique forum for debate and a multiplicity of views and experiences from both high-profile academics and those who engage with enlargement on an implementation level, this book covers a wide range of topics that are key to a successful transition and integration process and thus to the provision of a prosperous growth environment within a larger Europe. Special attention is paid to monetary integration, notably entry into ERM II, on which representatives of the national central banks involved present their views.

Chapter 1: Toward a stronger Europe in the global economy

Horst Köhler

Extract

Horst Köhler1 1. THE GLOBAL ECONOMY The global economic outlook is improving. Led by the United States, prospects for a recovery are firming in the advanced economies. This is good news for emerging market and developing country economies as well, which have also benefited from a supportive financial market environment. But we know that risks remain. Chief among these risks is the excessive dependence of the world economy on growth in the United States and the resulting global current account imbalances. Resolving these imbalances in an orderly manner must be the primary objective of international economic policy. And this requires a cooperative approach involving all major countries and regions: ● ● ● ● In the United States, significant monetary and fiscal stimulus is in the pipeline. But while fiscal policy has provided short-term support to the economy, going forward it will be critical to restore medium-term fiscal balance. In the euro area, indications of an economic recovery are still more tentative. But there are increasing signs of returning confidence and it is encouraging that several euro area economies have initiated longoverdue structural reforms, buoying expectations. In Japan, recent data point to a much hoped-for firming of the shortterm economic outlook. And structural reforms in the corporate and financial sectors must continue to be pursued vigorously to raise longer-term growth prospects. In emerging market economies, sound economic policies and structural reforms are bearing fruit in several countries. But vulnerabilities bear watching, particularly as a result of persistent high levels of public...

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