New recession in the euro area is unlikely, a depreciation of the euro will help reduce the negative effects that have measures to reduce the debt on economic growth, says Pier Carlo Padoan, chief economist of the Organization for Economic Cooperation and Development (OECD) said from CNBC. Governments need to pursue fiscal consolidation and reforms in the pension insurance system and labor market to promote economic growth, said Padoan. To convince skeptical financial markets in the effectiveness of its strategy, governments should also show that the coordinated work, he added. Even measures to reduce the debt limit growth in the eurozone, it will be partly offset by increased demand for European goods from Asian and other markets due to their better competitiveness resulting from weaker euro, he said. According to data from the European Central Bank the value of the euro against the U.S. dollar declined by 14% this year, while trade-weighted value of the euro has decreased by more than 10%. “Will there be a” W-shaped “recession in Europe? I do not think, “said Padoan, emphasizing that the massive debt following the global recession in 2007 – 2009,” is not just European history “and that Europe will deal with this problem faster than others.
Manufacturers in the euro area were not late to take advantage of euros due to weak international demand for increased European goods, said Padoan. “If you combine these two factors – strong growth in Asia and the weak euro, this could give a pretty good boost to European exports,” said Padoan. “Low euros in the short to medium term is very good news.” “In any case, it would be good for the world economy if the currency rates suffering a slight adjustment. The euro has certainly been overestimated for some time, while Chinese yuan was certainly underestimated. The publication of his latest economic report in this month the OECD increased its forecast for world economic growth to 4.6 percent in 2010 and 4.5 percent in 2011 than projected in November, respectively 3.4% and 3.7% growth. OECD forecast for the global labor market is also quite optimistic. The organization expected that unemployment in its member countries has reached its peak of about 8.5 percent – much lower cost than originally anticipated 10%. OECD and raise its forecast for U.S. growth to 3.2 percent this year and next than expected in November, respectively 2.5% and 2.8%.