Europe Will Have To Face Painful Adjustments To Its Economy, Says Economist

EUROPE WILL HAVE TO FACE PAINFUL ADJUSTMENTS TO ITS ECONOMY, SAYS ECONOMIST KUALA LUMPUR, Dec 6 (Bernama) -– Europe will have to face painful adjustments to its economy as countries within the Euro zone losing competitiveness will face the possibility of staying out of the 27-member European Union (EU) trading bloc, says Europe’s prominent economist, Douglas McWilliams. He said some countries within the Euro zone have lost their competitiveness in the export market and have an overpaid workforce. "Europeans work less, take longer holidays and have higher wages compared with the poverty level in other parts of the world," he said in a interview with Bernama TV Monday. While some countries in the euro region such as Italy was doing poorly in terms of export growth, Germany, on the contrary, was doing well in export growth as compared to five years ago, said McWilliams, the chief executive of London-based Centre for Economics and Business Research and chief economic advisor, Institute of Chartered Accountants in England and Wales. He said current global economic developments in the global economy was undergoing broader economic power shift from the West to the East, with China and other Asian nations' economies emerging stronger in the global economic front and "this is an uncomfortable adjustment for Europe." He said European leaders were working on concrete solutions to resolve Europe’s debt crisis which was derailing world economic growth. “There is a good chance that they (the European leaders) will resolve the debt crisis. If this is to happen, then the world economy could pick up as we go into 2013,” he said. McWilliams said the world economy would slow down next year before picking up by end-2012. “More expansion in the monetary and fiscal policies are expected in various parts of the world to spur economic recovery,” he said. Within the Asean region, he said, the knock-on effect from the Europe debt contagion crisis would most significantly be felt in Singapore and Indonesia in their financial services and commodity sectors. However, when the global economy picks up by 2013, McWilliams said Singapore and Indonesia will be the leading economies within the South East Asia region due to Singapore's economics dynamics and the size of Indonesia's population. He said Malaysia would continue to enjoy good economic growth. McWilliams said China will be the world dominant economic power, taking over the US economy by 2013, while India and Russia will be the other leading economies, backed by commodity prices, currency movements and growing economic activities. He said there would also be a shift in the Asean economy from one which was traditionally reliant on export growth to the importance of domestic consumption as the new driver of economic growth. He said the emerging middle-class in Malaysia were spending on goods and services and this would keep the economy going even when the global economy was going through a "roller coaster" pace. He envisaged that China's economic growth would be sustained with the authorities taking monetary measures to address difficulties in its property market. –- BERNAMA