BRUSSELS, Sept. 2 (Xinhua) -- The worst part of the
economic crisis in the euro zone is over, but it is still too early to end
financial stimulus, a top European economic official said on Wednesday.
"The worst is over for the time being," Luxembourg
Prime Minister Jean-Claude Juncker, who is also the chairman of eurozone
finance ministers, told reporters before an informal
meeting of the ministers here on Wednesday.
Official figures released by the European Union
(EU)'s statistics office Eurostat showed that the eurozone economy shrankat a
slower pace in the second quarter of this year, confirming the optimism
expressed by Juncker.
In the second quarter of 2009, the combined economy
of the 16-nation bloc sharing the euro fell by 0.1 percent quarter-on-quarter
after contracting sharply by 2.5 percent in the previous three months, according
to Eurostat.
Despite the improvement of the economic situation,
Juncker said it was still too early to carry out an exit strategy to phase out
economic stimulus.
"The time has not yet come to withdraw the fiscal
stimulus. We have to continue this effort in the course of this year and next
year, then we have to agree on an exit strategy," he said.
So far, EU countries have spent billions of euros on
their stimulus packages in the face of the worst economic crisis since the
Second World War.
With economy showing early signs of recovery, there
is an increasing call for gradual withdrawal of fiscal stimulus for fear of the
inflation risk and heavy burden on public finance.
"While countries around the world continue their
effort to promote economic recovery, there is a clear understanding that
international coordination is necessary both to consolidate public finances from
the moment the recovery takes hold and to pave the way towards a more
sustainable global growth model," the EU said in a press release ahead of the
special meeting of its finance ministers.
Swedish Finance Minister Anders Borg, whose country
holds the rotating EU presidency, said after the meeting that the ministers
agreed there should be plans to end fiscal stimulus at some point, but it was
not now.
Analysts said the timing is essential since removing
the stimulus too soon would be detrimental to the momentum of economic recovery,
while a slow withdrawal would increase the risk of inflation.
"We need to be prepared not to start the withdrawal
of the stimulus tomorrow, but to know before the moment arrives ... how to do
it, when to do it and what is the degree of coordination that we need," EU
Economic and Monetary Affairs Commissioner Joaquin Almunia told reporters after
attending the meeting.
French Economy Minister Christine Lagarde warned it
was still difficult to say that the eurozone economy is recovering.
"The decline has stopped, but we are not yet in a
situation of recovery or turnaround, at least not everywhere in the euro zone,"
she said after the meeting with her EU counterparts.
"I do not use the words recovery, turning point or
turnaround because we decided this morning that we are not there yet," she
added.
