OECD Economist Warns of Risks of Greek Crisis on Eurozone Recovery

By William Horobin 

        AIX-EN-PROVENCE, France--The Greek crisis risks taking the steam out of the eurozone economy, just as the currency area was showing signs of recovering from a long period of weak economic growth, the chief economist for the Organization for Economic Cooperation and Development said Friday.
        In the first half of the year, the eurozone economy had emerged as a strong point in the global economy, aided by the European Central Bank's quantitative-easing program, a weaker euro and lower oil prices, said OECD's Catherine Mann.
        "The plane is headed down the runway, it's not quite yet at takeoff speed, and you don't want downdrafts," she said on the sidelines of Rencontres Economiques conference in Aix-en-Provence.
        The outcome of Sunday's referendum in Greece will be crucial in determining how much of a drag the crisis proves to be, she said.
        Ms. Mann's comments come as European leaders have played down the potential impact on their respective economies, even while acknowledging that a "no" vote could put Greece on a path to exiting the eurozone.
        "Today the French economy is robust, much more than four years ago. It has nothing to fear from what could happen," French President Francois Hollande said Monday.
        Ms. Mann said a key factor will be how the crisis affects already-weak investment in the eurozone. Aggregate demand in one country has a very strong influence on demand in neighboring countries in the same economic area, she said.
        "That's a concrete way in which the failure to resolve the Greek situation impacts on investment in Europe," Ms. Mann said
        Still, the OECD's chief economist was optimistic about the effects of a positive outcome that sees Greece remaining in the eurozone
        "A resolution would bolster not just Greece, but would bolster the whole euro area," Ms. Mann said.
        Write to William Horobin at William.Horobin@wsj.com
        (END) Dow Jones Newswires

        July 03, 2015 15:33 ET (19:33 GMT)

#FX
#Forex
#SaleForex
#OECD_Economist
#WarnsRisks
#GreekCrisis
#EuroZoneRecovery