President Lee Urges Eurozone to 'Desparately' Come Up With Fundamental Measures

[xomputer]

President Lee Myung-bak has urged European countries to "desperately" come up with fundamental measures to find a workable solution to the eurozone debt crisis.
Speaking at the first session of the Group of 20 Summit, which kicked off on Monday in Los Cabos, Mexico, President Lee stressed that the eurozone must carry out strong and decisive structural reforms, as Korea did back in 1997, during the Asian financial crisis.
President Lee said that the economic imbalance within Europe should also be resolved immediately, adding that the eurozone should seek financial integration that can support its monetary union.
High unemployment rate, and especially youth unemployment, is another issue that the Korean president highlighted as one of the biggest problems stoking the eurozone crisis.
Earlier in the day, at the Business 20 Summit, President Lee called on the G20 nations and business leaders from around the world to create more job opportunities.

 

[waltky]

Eurozone recession to persist...

Eurozone downturn and deficits to persist, Commission says
22 February 2013 - The eurozone recession will persist into 2013, the European Commission has conceded in its latest forecast.

Governments face an uphill battle to rein in their overspending, with Spain, France and Portugal all failing to cut their deficits to agreed targets. Spain's deficit, at 10.2% of GDP in 2012, was well above its 6.3% target, and would stay above target into 2014. The eurozone economy would shrink 0.3% in 2013, the Commission said, making the governments' task even harder. Previously, the Commission had expected the 17 economies in the eurozone to collectively enjoy 0.1% positive growth this year. In 2012 the economy is estimated to have shrunk 0.6%. Delivering its winter forecast, Commission Vice-President Olli Rehn said that unemployment across the single currency area expected to continue rising to 12.2% this year as the recession lingers. Last year's jobless rate was 11.4%.

However, he said the eurozone was expected to rebound in the last three months of this year, registering 0.7% growth in the fourth quarter. The forecast appears somewhat more pessimistic than the European Central Bank President Mario Draghi, who last month said he believed the eurozone would begin recovering in the second half of this year. The Commission's acknowledgement that the eurozone is in worse economic shape than previously mirrors a change in the International Monetary Fund's thinking. The IMF said in January that it expected the eurozone to experience a "mild recession" in 2013, having previously predicted growth.

The scale of Spain's spending cuts has been unpopular, but it will have to go further if it is to meet EU targets

Plea for more time

The austerity measures being implemented by eurozone governments are widely blamed by economists as a major contributor towards the Continent's economic woes, although there is disagreement among economists as to whether governments should therefore go easy on the spending cuts. Spain, which has one of the biggest budget deficits, made the least headway in bringing its finances back under control, and faces one of the nastiest recessions. Of its 10.2% deficit in 2012, 3.2 percentage points was due to the cost of cleaning up its banking system, which has been decimated by loans made to property developers and speculators during the last decade's housing bubble that have since proved unrepayable.

More worryingly, the Commission does not expect Spain to improve greatly over the next two years. Its deficit is forecast to be 6.7% this year, compared with a 4.5% target, and 7.2% in 2014, compared with a 2.8% target. Spain cannot simply blame its weak economy for this outcome, the Commission implied. Madrid's structural deficit - which strips out the effect of the recession - fell only by 1.4% of GDP last year, barely half the 2.7% target set by the Commission. However, overspending by governments across the eurozone as a whole is still expected to fall on average this year. That is despite the persistent economic downturn, which typically reduces governments' tax revenues and increases their benefit bills.

More BBC News - Eurozone downturn and deficits to persist, Commission says

 

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Eurozone hits 12.1% unemployment...

Eurozone unemployment at record high as inflation drops
30 April 2013 - Unemployment in the eurozone has surged to a fresh record high, while inflation has fallen to a three-year low, boosting expectations that the European Central Bank will cut interest rates.

Unemployment in the 17 countries using the euro hit 12.1% in March, up from February's 12%, according to official figures from Eurostat. In total, 19.2m people are now out of work in the region. Separate Eurostat data showed that inflation slowed to 1.2% in April. Greece and Spain recorded the highest unemployment rates in the eurozone, at 27.2% and 26.7% respectively, while Austria, at 4.7%, and Germany, at 5.4%, had the lowest rates. Youth employment, defined as those under 25, hit 3.6 million in the eurozone. In Greece, 59.1% of under-25s were unemployed as of the end of January, while in Spain, 55.9% were unemployed.

Inflation falls

Meanwhile, separate data from Eurostat showed consumer prices rose 1.2% in the year to April across the eurozone, a marked slowdown from March's 1.7% rise. The slowdown, driven by a sharp fall in energy prices, means inflation in the eurozone is now at its lowest level since February 2010. The figure was much lower than the fall to 1.6% that analysts had expected.
Interest rate cut

Economists said that the disappointing data had increased the likelihood of the European Central Bank announcing a cut in interest rates when it reveals its decision this Thursday. "If an ECB rate cut on Thursday didn't look nailed-on before, it certainly does now,'' said Craig Erlam, market analyst at Alpari.

Marie Diron, senior economic adviser at Ernst & Young, added: ``It now seems pretty certain that it will lower interest rates." A Reuters survey last week found that a majority of economists expect the European Central Bank (ECB) to cut the bank's main refinancing rate by 25 basis points to a record low of 0.5%. If the ECB was to cut rates, it would mark its first reduction since July last year.

BBC News - Eurozone unemployment at record high as inflation drops