Reform best route out of crisis

June 5, 2009
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, WARSAW, June 5 – EU Economic Affairs Commissioner Joaquin Almunia Warsaw called on new EU states to press on with reforms to speed their recovery from the global economic crisis, in remarks here on Friday.

"At the EU level we are doing everything to support the crisis hit countries, but the new member states must also make efforts to save the work of their achievements," he told delegates to a conference held by Poland\’s central bank marking 20 years of market reforms after the 1989 collapse of communism.

"This means implementing sound domestic policies to speed the recovery from crisis and ensure sustained catching up," Almunia said.

On Thursday he urged Latvia — the EU\’s most severely recession-hit state — to do more to slash its ballooning budget deficit as it faces a forecast 18 percent contraction in GDP this year.

"They (reforms) would also pave the way for entry into the euro area which is a crucial step for new member states — the single currency is key to further economic integration — it brings more trade and increased inward investment," Almunia said.

"The euro is also a major asset because it provides an anchor of stability in times of economic and financial turmoil as the current crisis is showing," he added.

The EU economic chief on Friday praised Poland as "proving resilient" in the crisis.

"This is partly because it is larger economy with a higher proportion of domestic demand which make it less reliant on exports compared to other central and eastern European economies," Almunia said.

"On top of this Poland is benefiting from prudent approach from its banks," he added.

The largest 2004 EU newcomer, Poland is the only country among the EU states for which first quarter 2009 data have already been published to have recorded outright growth on a quarterly comparison.

It is expected to register zero growth this year, narrowly avoiding recession.

European Central Bank chief Jean-Claude Trichet, also participating in the Friday conference in Warsaw, echoed Almunia\’s praise for Poland\’s macroeconomic prudence.

"Poland has built up less of macroeconomic imbalances and (…) it has built up a set of policies and reforms that have been on the whole appropriate in the past years," Trichet said.

"In contrast some countries have accumulated large domestic and external imbalances making them more vulnerable to changes in international investor sentiment," he added.

 

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