Europe reforms 'hard' without growth: Zoellick

Wednesday, 02 May 2012 00:55

Posted by Shoaib-ur-Rehman Siddiqui

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WASHINGTON: World Bank president Robert Zoellick said Tuesday that Europe would struggle to achieve needed economic reforms without growth to support them.

"I think right now Europe depends on what happens with Italy and Spain," Zoellick said in a CNBC television interview.

The two countries "are undertaking fiscal consolidation and structural reforms but that's very hard to do in a no-growth environment," he said.

Italy and Spain, the third- and fourth-biggest economies in the eurozone, are in recession. Investors fear Spain, in particular, may be the next in the bloc to follow Greece, Ireland and Portugal to seek an international bailout.

"One of the challenges, frankly, not only for Europe but the United States, is to try to undertake structural reforms while you've still got growth," said Zoellick, a former US diplomat.

The head of the global development lender was asked to comment about France ahead of Sunday's presidential election. The latest polls put Socialist candidate Francois Hollande well ahead of the right-wing incumbent, President Nicolas Sarkozy.

"My guess is you'll see out of the Hollande election that there will be some (European) agreement to try to add to some investment facilities... to try to support some of the overall structural reforms," he said.

Hollande has pledged to re-negotiate a hard-fought eurozone fiscal pact to incorporate growth measures, and has vowed to veto it if he considers such moves insufficient.