TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Eurozone not out of the woods yet, economist warns

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

Daily Photo Galleries

By The Associated Press
Saturday, Jan. 26, 2013, 9:00 p.m.
 

DAVOS, Switzerland — Is the euro crisis over? Not by a long shot, a leading American economist says.

Even as the head of the European Central Bank talked on Friday of “positive contagion” in the markets and predicted an economic recovery for the recession-hit eurozone later this year, economist Barry Eichengreen warned that the debt crisis that has shaken Europe to its core could easily erupt again this year unless European leaders move faster to solve their problems.

While European governments and markets have been breathing easier in recent months after years of turmoil, it's no time for complacency, said Eichengreen, who has chronicled the Great Depression and explored the consequences of a breakup of the euro currency used by 17 nations.

“Nothing has been resolved in the eurozone, where markets have swung from undue pessimism to undue optimism,” Eichengreen told The Associated Press in an interview at the World Economic Forum in Davos, Switzerland. “They said all the right things last year ... and they've been backtracking ever since.”

He warns that the crisis over too much debt burdening governments and banks in the 17-country currency group “is going to heat up again in 2013.”

He urged eurozone leaders follow up on its proposals to steady its banking system and keep failed banks from adding to government debt through expensive bailouts.

European leaders in Davos this week are seeking to reassure investors and corporate leaders that the continent is on the mend after its punishing debt crises.

European Central Bank chief Mario Draghi on Friday forecast a recovery in the eurozone economy in the second half of the year and spoke of “a new, restored sense of relative tranquility” and “positive contagion on the financial markets.”

But he acknowledged that “we don't see this being transmitted into the real economy yet.”

Draghi said governments need to move ahead with structural reforms to make their economies grow faster, which will help reduce government debt.

 

 
 


Show commenting policy

Most-Read Business Headlines

  1. Coal official: Number of W.Va. mining sites falls to 96
  2. Mylan’s 3Q profit triples on strong U.S. sales
  3. Hedge funds sue to block EDMC deal
  4. Strengthening U.S. growth reflects help from Federal Reserve
  5. Sweet tooth will cost you more next year
  6. Radiation detection of drilling waste nearly set at W.Va. landfills
  7. How to avoid Amazon and still get deals
  8. Highmark’s new REMWorks Sleep Store will sell sleep apnea equipment
  9. Profit falls at vitamin retailer GNC Holdings in third quarter
  10. Kennametal profit, sales improve in 1Q, but forecast reduced
  11. Health care law compliance complex for employers
Subscribe today! Click here for our subscription offers.