The euro area remains the biggest threat to global growth as imbalances still need to be addressed, Organization for Economic Cooperation and Development Chief Economist Pier Carlo Padoan said.
“The weaknesses of the euro area are still a source of concern,” Padoan said in a Bloomberg Television interview today in Cernobbio, Italy. “We can have a way out in Europe having reforms taking place not only in the debt countries but in all of the countries, including Germany, which should invest and open more.”
European finance ministers agreed yesterday in Copenhagen to boost a firewall against the region’s debt crisis by 500 billion euros ($667 billion) on top of the 300 billion euros already committed. Europe is counting on those funds, plus the European Central Bank’s extra lending and bond-buying programs.
The decision to increase the firewall “provides time, but more needs to be done, especially by governments in sensitive countries, to carry on the reform programs,” Padoan said.
Fiscal convergence, euro bonds, as well as common fiscal rules are among measures that the region should adopt, Padoan said. Germany would benefit from liberalization of its services sector, Padoan said, adding that the country should increase investment.