Global economy hopes raised after European stimulus Member of theBoard of theEuropean Central Bank Benoit Coeure, left, and Governor of theBankof England Mark Carney, right, attend thepanel TheGlobal Economic Outlook at theWorld Economic Forum in Davos, Switzerland, Saturday, Jan. 24, 2015. Theworlds financial and political forum at theSwiss ski resortwill end today. MICHEL EULER — AP DAVOS, Switzerland — The global economic outlook just got brighterafter this week’sbig stimulusfrom theEuropean Central Bank, leading policymakers fromaround the worldsaid Saturday. In a panel atthe WorldEconomic Forum in Davos, they said a perkier Europe, coupled with a prolonged period of low oil prices, could help shoreupthe global economy following a period of underperformancethat has prompted many forecasters to reducetheirgrowthforecasts. “Loweroil pricesand thebig decision by ECB couldfurtherimprove world economic outlook,” saidHaruhiko Kuroda, governorof the Bank of Japan. The ECB’splanned1.1 trillion-euro ($1.2 trillion) stimulushas been one of the main talking points at Davosand hashelped counter some of the pessimismthathasenvelopedthe global economy in thepast few weeks. Stock marketsaround the world have surgedamid hopestheECB move couldhelp boost the ailing economy of the19-country eurozone. However, BenoitCoeure, an executive boardmember at theECB, insisted thaton itsown, it won’t be enough. Hesaid governmentsacross the region have to enact a raftof structural reforms to theireconomies, suchas making theirlabormarkets moreflexible andencouraging businesses to invest. F R O N T - E N D W E B D E V E L O P M E N T generalassemb.ly/Web-Development 10-Week Course at General Assembly. Learn Web Development. Get Info. “We havedone ourpart, others have to do their part,” hesaid. Coeurehoped the stimulus will give governments the spaceand encouragementto proceedwiththose measures. “In the case of Europe, being patient isjust a risk thatwe don’twant to take,” he said. Some in Europe, particularly in Germany, are worried that theECB’s bond-buying program may ease the pressureon governmentsto do more to reform their economies. In Germany, there’salso concern the stimulus isdebasing the euro currency – the prospectof more euros in circulation can weighon the currency. The euro hasfallen sharply sinceThursday’sannouncement, and istrading at 11-year lows aroundthe $1.12 mark. That’spotentially good newsforeurozoneexporters asitmakestheir warescheaper in international markets. A lowereuro can also boost inflation asimportsget pricier. The primary motivation behindthe stimulusisto get inflation in the eurozone back towardthe target of just below 2 percent. Currently pricesare falling modestly. Coeureinsistedthe lowereuro wasn’ta primary motivation of the ECB, stressing thatthe ECB doesn’thave an exchange rate target. The euro’s fall, he said, “waspart of the channel” by which thestimulus worksbut “not themain consideration.” Mark Carney, governorof theBank of England, also welcomed theECB’s stimulusandsaid low oil pricesmay prevail for longerthan many people think. “Thatcreatesan opportunity that isconsiderable andpossibly undervaluedfor the global economy,” he said. Carney didissue one note of caution, warning thatthe currentlow interest rates aroundthe world andthe stimulusprogramsin Europe andJapan couldprompt “excessive risk-taking.” However, hesaid a better international supervisory framework means theworld economy ismore ableto deal with that than itwasbefore theglobal financial crisis in 2008.
Posted on: Sun, 25 Jan 2015 01:52:59 +0000
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