Nowotny: “The Worst Is Over”
OeNB´s (Austrian National Bank) governor Ewald Nowotny thinks that the economic situation in the Eurozone has become more stable.
According to Nowotny, the CESEE countries tend to become more stable. “We are on the right way. It is still very difficult, and we have not reached our target yet. But we are heading in the right direction.”
Nowotny argues that the Eurozone has no currency crisis, but a crisis of single member countries. “The crisis is not over yet, but the worst is over.” After 2007, the economic development of the Eurozone member countries was highly different. “There were remarkable imbalances and dramatic deficits. But the situation has improved.” He explains.
OeNB´s governor stresses that one of the biggest challenges is to continue a growth-stimulating budget consolidation. Nowotny admits that the austerity measures have also caused detrimental effects.
According to ECB, economic growth will be negative again in 2013. The economy is expected to shrink by 0.3%. In 2014, ECB has forecasted a growth rate of 1.2%. “This is also good news for eastern Europe.” Nowotny argues.
Regarding the Austrian banking industry, Nowotny is optimistic that the operations in the CESEE will not be reduced. “For both sides, the engagement was a success. Thus, the banks will stay there.” Of course, the risks in the CESEE countries are highly different. “As central bankers, we have to be aware of these risks.” he concludes.