Wednesday, December 5, 2012
Greece ranks first in terms of economic reform and adjustment progress, said the annual report prepared by the Brussels-based Lisbon Council think-tank, titled 2012 Euro Plus Monitor: The Rocky Road to Balanced Growth.
"Almost all countries in need of adjustment ... are slashing their underlying fiscal deficits and improving their external competitiveness at an impressive speed," the report said. Furthermore, all economies that were running excessive external deficits have turned their external balance around convincingly.
Real unit labour costs are falling sharply in Greece, Ireland, Portugal and Spain. On the other hand, wage moderation, long seen as holding up internal German demand, has ended. The big news is that Greece, Portugal and Spain, have achieved very impressive shifts. As the Lisbon Council report suggests, for the eurozone to overcome the crisis, it needs to end the constant concern about an imminent Greek disaster, by providing a clear vision of keeping Greece in the euro. It also needs to shift the policy focus away from extra austerity to pro-growth structural reform. 
