Europe needs to make structural reforms, the head of the OECD said on Friday, backing those like European Central Bank (ECB) President Mario Draghi who argue that countries cannot rely solely on central bank stimulus measures to boost their economies.
"We owe a debt of gratitude to the central bankers…but it's time to go structural," Angel Gurria, Secretary-General of the Organisation for Economic Co-operation and Development (OECD), told CNBC on Friday.
Gurria named multiple sectors in Europe which might benefit from reforms, including education, regulation, the labor market, health systems and infrastructure.
"They (the reforms) are all medium—to—longish-term before they start seeing results," he said.
Euro area gross domestic product (GDP) came in flat in the second quarter— below expectations—with some of the its biggest economies, such as France, struggling to make headway.
In addition, German economic data has disappointed over the last couple of months, in what could mark a worrying turn for the euro zone's recovery.
Draghi has repeatedly stated that ECB stimulus measures, such as asset purchases and ultra-low interest rates, will only be effective if euro zone countries make the necessary reforms. Like Gurria, renowned investor Wilbur Ross, CEO of WL Ross & Co, voiced agreement with Draghi this week.
"Mario Draghi is quite right when he says Europe needs structural reforms to bring joblessness down," he told CNBC on Wednesday. "Those countries with the most liberal labor laws, like Ireland, have had the fastest recovery. Those with the most restrictive labor laws have had the slowest. Policymakers thought they were protecting workers, but have been making it worse."
Gurria added that euro zone countries struggling with low competitiveness needed to bite the bullet and cut wages.
"They have to bring down the level of the wages… those countries that have done it will regain the competitiveness they have lost," he said.
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