OECD: Rising Populisms Risk for Eurozone Growth

A negative political event such as the rise of populist parties in some euro area countries, associated with the unfinished Eurozone architecture, could lead to a steep increase in the redenomination of risk and the loss of market access for some debts. sovereigns of the eurozone “: the OECD writes in the latest report on the euro zone about the risks that weigh on growth prospects. The increase in protectionist measures is also reported among the risks.

“A faster solution on the high level of impaired loans in different countries would be crucial to facilitate the development of credit and the transmission of monetary policy, even if downwards, they are still high in some countries hit by the crisis. higher than in Ireland “. “An acceleration of the solution to npl is the key to expanding bank credit”, given that the high level is still a “problem for financial stability“.

The Eurozone is growing “robustly” and countries should take advantage of the expansion to “improve their fiscal position”. In particular, those with high debt “should ensure a significant decline”, aware that “budget consolidation is desirable when the times are good”: the OECD writes in the 2018 report on the Eurozone economy. According to the OECD we should also simplify the rules of the Pact, “maintaining the necessary flexibility to take into account the economic situation”.