With structural reforms still ahead, the euro area economy seems vulnerable to an abrupt unwinding of global imbalances in the US and Asia. Today, there is large consensus in Europe that lower growth in the EU is largely structural in nature. In order to improve its position in the global economy, we have to work on reducing growth differentials, in particular vis-à-vis the US.
We should respond with policies designed to use opportunities of globalization, particularly to increase productivity and growth, while minimizing unavoidable adjustment costs. The right answer to globalization and international competition is therefore to continue and intensify the structural reform process. Standstill would be detrimental.