Reforms Needed For Economies To Be More Competitive
Western Europe is home to some of the largest and most prosperous countries in the world. The populations of the countries in Western Europe, Austria, Belgium, France, Germany, Luxembourg, the Netherlands and Switzerland, enjoy a standard of living that is among the best in the world.
Despite this, the economic performance of some of these countries in the early 2000s was poor. However, this situation began to improve in 2005-06 and the stronger performance continued in 2007, with some of the countries experiencing their highest growth rates since the beginning of the decade.
Bucking the trend of slow growth both Austria and Luxembourg have performed well in recent years, with Austria outperforming the EU average for growth since 2003. This impressive performance continued in 2007 and the country posted growth of 3.4 per cent. Luxembourg’s economy grew by 4.5 per cent, the highest rate in the region.
France, Germany, the Netherlands and Switzerland suffered badly at the turn of the century with all of their economies stagnating. For most, growth picked up in 2004, however, German GDP growth averaged just 0.7 per cent between 2001- 2005. Since 2006, all of these countries have begun to show more dynamism. For most growth increased again in 2007 with all posting growth of over two per cent. Both the Netherlands and Switzerland experienced growth of over three per cent with the Netherlands putting in its best economic performance since 2000.
Undoubtedly, the region as a whole has begun to suffer as a result of the turmoil in global financial markets. All the countries in the region have seen their economies begin to slow in 2008. For some the effects have been worse than for others. France is expected to produce the worst performance in 2008 with growth forecast to fall to just 0.8 per cent. In contrast, both Luxembourg and Austria are expected to maintain growth rates above the EU average.
The slowdown comes at a time when the eurozone, which excludes Switzerland, had begun to recover. Unemployment statistics had begun to tumble and the improvements in the labour markets had bolstered consumer confidence which in turn had boosted spending. Decreases in inflation had increased purchasing power but all of the countries have seen inflation increase as food and energy prices have increased.
Aside from the overall global economic slowdown, the eurozone’s poor performance in the 2000s has generally been blamed on a lack of sufficient structural reform. It is essential that these countries move ahead with reforms and take the necessary steps toward making their economies more competitive.
The eurozone contracted for the first time since it was established ten years ago in the second quarter of 2008. Initially the IMF had forecast that the eurozone would see growth by 1.4 per cent. However, the region is now experiencing a recession.
Both The Netherlands And Switzerland Experienced Growth Of Over Three Per Cent With The Netherlands Putting In Its Best Economic Performance Since 2000.
