Refugee crisis crucial to Europe recovery: Siemens

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Fixing Europe's migrant crisis is crucial to the region's exit from a multi-year economic downturn, according to one of the continent's largest companies.

"I think currently the single biggest issue Europe has is not so much about inflow of investment...What we have today is a massive inflow of refugees," said Joe Kaeser, CEO of German engineering giant Siemens.

"If Europe masters the refugee challenge, they will also master their economic destiny going forward."

Speaking to CNBC at the Singapore Summit, an annual conference of over 400 business leaders, Kaeser's timely remarks come ahead of an emergency meeting this week where European leaders will debate how to respond to what is being called the continent's worst refugee crisis since World War Two.

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Kaeser's comments also stand in contrast to other business leaders such as UBS chairman Axel Weber who told CNBC at the Summit that increased inward investment and structural reforms were essential factors for a European economic recovery.

"Governments have only sluggishly and reluctantly entered into reform agendas and I think that's the major reason why European dynamics are subdued and that's why price pressures don't build, because the economy just doesn't enter into an escape velocity mode," Weber said.

While Europe has long been a popular destination for migrants from conflict-ridden regions in the Middle East and Africa, the sheer volume of recent arrivals has left several countries unable to cope.

Joe Kaeser, President & CEO of Siemens
Juan Aguado | Getty Images

Croatia has been packing off newly arrived migrants on buses and trains to Hungary, which over the weekend installed a steel gate at the Croatian border in order to prevent further entrants. On Sunday, media reported that more nearly 11,000 migrants walked into Austria from Hungary.

The current crisis puts the continent through a massive test of how integrated it really is, added Kaeser, whose home country of Germany implemented temporary border controls last week to stem the influx of migrants. The economic powerhouse is widely expected to receive the highest number of asylum seekers in the European Union.

For now, it remains to be seen how governments will resolve the issue, according to Kaeser: "We'll see how it goes, I think the jury is still out on this one."

Overall, the CEO believes Europe is still in the process of recovering from the sovereign debt crisis.

"We're reasonably satisfied at what we see in Europe," he said, adding that a cheaper euro helps export-oriented sectors such as manufacturing.

The common currency is nearly 7 percent lower year-to-date after skidding to twelve-year lows earlier this year, largely driven by expectations of further monetary stimulus from the European Central Bank.