European Commission chief José Manuel Barroso yesterday said he did not expect Europe to slide into recession, calling the European Union and the euro “strong and resilient”.
On his first official visit to Australia, the Portuguese also stressed the need to strengthen the international monetary system and continue financial regulatory reform to help prevent any further economic crisis.
“We don’t anticipate a recession in Europe. The latest forecast by the European Commission shows there will be growth, modest growth it is true,” he said during a joint press conference with Prime Minister Julia Gillard.
His comments follow rating agency Standard and Poor’s last week saying a second quarter slowdown had increased the risk of a double dip recession in Europe, but that the region should escape with sluggish growth this year.
The agency lowered its forecast for eurozone growth to 1.7 per cent this year from 1.9 per cent, with evidence of a slowing in some of the bloc’s strongest economies.
Moving to reassure nervous markets, amid US debt woes and stagnant growth, Mr Barroso added that the European Union and the euro were in good shape.
“I want to be very clear here: T,he European Union and euro are strong and resilient,” he said.
“We are doing all it takes, from tackling the underlying budget problems to strengthening the governance of the eurozone, from tighter financial regulation to improving our overall preparedness.”
On Greece, the EC chief, who heads to the Pacific Islands Forum in Auckland later this week, said it was too early to judge efforts by the Greek government to adhere to austerity targets demanded under its bailout terms.
But he stressed Athens has said it would meet its commitments.
“We are making a mission to Greece, and we are now in the process of analysing what Greece has been doing,” he said.
“It is premature now to make an assessment on exactly the efforts of the Greek government.”
On Friday, Greek Finance Minister Evangelos Venizelos conceded his country would have to revise its public deficit target for this year.
This was a key condition for continued funding from the €110 billion European Union-International Monetary Fund-European Central Bank bailout loan agreed last year.
Ms Gillard said there had been testing times in Europe and Australia, and welcomed the steps European authorities had taken to address sovereign debt problems and to press on with reform.
“We know and understand these are difficult decisions but we know that tough decisions are needed to stabilise financial markets,” she said.
In a joint statement, Mr Barroso and Ms Gillard both reaffirmed their commitment to boosting economic cooperation in international forums ahead of the G20 summit in Cannes to help achieve “strong, sustainable and balanced growth”.
They also agreed on the need to strengthen the global monetary system and continue financial regulatory reform, “which will contribute to addressing the causes of the current vulnerabilities and preventing future crises”.
During talks in the national capital, the two leaders also discussed free trade and investment and their opposition to protectionist trade actions.
Mr Barroso called Australia one of Europe’s most like-minded partners, and said the European Commission had sought a mandate from its 27 member states to negotiate a cooperation framework treaty with Canberra. “It will serve as an umbrella for the many areas of our thriving cooperation,” he said, adding that it could be signed next month.