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The coming months will “remain difficult” in the euro zone, a junior minister in Germany’s finance ministry told a think tank in Dublin today.
Steffen Kampeter warned, too, that both fiscal stimulus and political efforts to weaken the euro vis à vis other currencies could “backfire”.
In a classic exposition of German economic orthodoxy, the 49-year old conservative stalwart dismissed efforts to manage demand by governments. Instead, he advocated the introduction of structural reforms, a focus on enhanced competitiveness and “growth friendly fiscal consolidation” as a means of boosting prosperity.
Speaking at the Institute of International and European Affairs, Mr Kampeter cited export growth data from the euro zone periphery as proof that the focus of policy efforts aimed at solving the crisis was succeeding.
Since 2009, the junior minister said that Spanish and Portuguese exports had grown by 22 per cent, those of Italy by 19 per cent and those of Ireland by 15 per cent. This has been the result of the reallocation of capital into export-focused industries he added.
Perhaps reflective of Germany’s more assertive stance in international affairs, Mr Kampeter was criticial of economic policy choices of both the US and Japan.
Noting that talks on an EU-US free trade agreement had begun under president George W Bush, Mr Kampeter said discussions on advancing transatlantic trade liberalisation agenda had not been “as fruitful as we had hoped” during the presidency of Barack Obama.
The German also raised questions about flagged changes to the conduct of monetary policy in Japan. A new regime at the Bank of Japan is widely expected to ease policy with a view to reflating the economy.
Mr Kampeter said that straying from the path of orthodox monetary policy could add to the challenges faced by the world economy, rather than contributing to solutions.
Mr Kampeter is a member of parliament for the centre-right Christian Democractic party, the senior coalition partner in Germany’s two-party coalition government.