Former Prime Minister Alfred Sant told the European Parliament in Strasbourg that the fundamental problem facing the eurozone,  beyond economic stagnation, is the growing economic divergences between regions and national economies.  Dr. Sant said parts of the eurozone system are benefitting from an internal undervaluation. It allows them to maximize sales of their output within the zone. They thereby achieve better scale economies for their output which helps them penetrate better non eurozone markets.

Speaking during  the debate about  “Growth rates in EU and spring 2015 economic forecast”,  the Maltese MEP said that meanwhile, other parts of the euro system are internally overvalued, which makes them uncompetitive both within and outside the eurozone.  To correct this, they can only carry out a painful internal devaluation, creating huge social problems without guaranteeing success. This huge imbalance in the eurozone’s economic system needs to be addressed before governance issues can be tackled effectively. Partial deepening of the eurozone’sgovernance structures on the basis of the existing economic imbalance risks only to increase the economic divergences.

Dr. Sant said the good news is that the indications of a recovery have been reinforced, even if prudently. Within this context, questions of economic governance have become vital, especially in the eurozone.  ‘We need effective governance mechanisms to promote and enhance the emerging conditions of recovery. Those introduced these past years to buttress  the eurozone need simplification and democratic accountability. Beyond that, some argue that further structural deepening is needed to compensate in part for deficiencies in the eurozone’s design. Now, they claim, is the right time to carry out these partial changes.’

You may follow Dr. Sant’s on link below:

Background info:

This forecast is based on a set of external assumptions concerning exchange rates, interest rates and commodity prices. The numbers used reflect market expectations derived from derivatives markets at the time of the forecast. This forecast takes into consideration all relevant available data and factors, including assumptions about government policies, up until 21 April 2015. Only policies that have been credibly announced and specified in adequate detail are incorporated and projections assume no policy changes. The Commission is due to update its economic forecast in November.

The main conclusions of the Commission`s forecast 

Economic growth in the European Union is benefitting from positive economic tailwinds. According to the European Commission’s Spring 2015 Economic Forecast, these short-term factors are boosting an otherwise mild cyclical upswing in the EU. Europe’s economies are benefitting from many supporting factors at once. Oil prices remain relatively low, global growth is steady, the euro has continued to depreciate, and economic policies in the EU are supportive.

More information can be found under the Commission`s press release:


Maltese Version


L-Ewroparlamentari Malti Alfred Sant lill-Parlament Ewropew fi Strasburgu qal li l-problema fundamentali taż-żona ewro hija d-differenzi ekonomiċi dejjem jikbru bejn ir-reġjuni u l-ekonomiji nazzjonali. Dr. Sant qal li issa żgur mhux iż-żmien li jiddaħħlu miżuri parzjali biex tissaħħaħ l-għaqda monetarja u ekonomika fiż-żona tal-ewro. Din qed iżżid u mhux tnaqqas id-diverġenzi bejn pajjiżi u żoni reġjonali fi ħdanha. Miżuri ta’ tisħiħ parzjali ikomplu ikabbru d-differenzi, mhux inaqqsuhom, qal Dr. Sant waqt diskussjoni dwar l-andament tal-ekonomija Ewropea.
Dr. Sant qal li partijiet mis-sistema taż-żona ewro qed igawdu minn sotto-valutazzjoni interna li tgħinhom jimmasimizzaw il-bejgħ fiż-żona ewro u qed jippenetraw is-swieq barra ż-żona ewro. ‘Hemm partijiet oħra taż-żona ewro li mhux kompetittivi kemm fiż-żona ewro u barra minnha. Biex jagħmlu tajjeb għan-nuqqas ta’ kompetittivita’ dawn il-partijiet ikollhom jiżvalutaw internament bil-konsegwenza li jinħolqu problemi soċjali kbar mingħajr garanzija ta’ suċċess. Dan l-iżbilanċ enormi fiż-żona ewro jeħtieġ ikun indirizzat.’

Dr. Sant qal li sinjali posittivi huma l-indikazzjonijiet ta’ tisħiħ fl-ekonomija fiż-żona ewro. ‘F’dan il-kuntest hija importanti l-governanza ekonomika fiż-żona ewro. Neħtieġu mekkaniżmi effettivi biex intejbu dan it-tisħiħ. Il-mekkaniżmi li saru fl-aħħar snin biex iħarsu ż-żona ewro jeħtieġu simplifikazzjoni u kontabbilita’ demokratika. Uħud jgħidu li hemm bżonn aktar miżuri strutturali biex nikkumpensaw għad-defiċjenzi tal-passat fil-ħolqien tal-ewro. Issa, qed jgħidu dawn l-uħud, huwa l-mument biex jsiru dawn il-bidliet parzjali.’ Qal Dr. Sant.

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