FT: Paper Prosperity and the Lost Generation of Greeks

Euro in Greek flag“How long will it take for Greece or Spain to reach pre-crisis levels of employment? Ten years would be an optimistic guess. It may take a generation. Only then can we credibly speak of an economic recovery,” states Wolfgang Münchau of the Financial Times in an article Monday, doubting the economic recovery in Greece and the eurozone. 

European diplomats and economists claim that confidence indices have risen but many other reports and research on essential issues such as unemployment or poverty are discouraging.

“Some of the most recent data suggest the eurozone economy will soon be overheating. The Markit eurozone purchasing managers’ index reached a 35-month high this month. The Ifo business climate index for Germany has climbed halfway to its previous cyclical peak, a level it could reach this year on current trends. Nonetheless, if you think these indicators signal a robust and broad-based economic recovery, you could not be more wrong,” says Münchau.

Economic indices may show Europe’s position in the international business market but they don’t reflect the real situation on the street and people’s problems. Unemployment in the eurozone stands at 11.9%, compared with 6.7% in the USA,  Münchau notes, adding that according to his calculations based on Eurostat data, gross fixed capital formation is 25% below what could have been expected, and industrial production is 16% below the trend. “Even if the mood has returned to normal, the economy certainly has not,” Münchau observes.