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For all of Europe’s economic woes, the region shouldn’t be compared to Japan, according to French central bank Governor Francois Villeroy de Galhau.
It’s “fashionable” to draw that parallel, said Villeroy, who sits on the European Central Bank’s Governing Council and is among the front-runners to take over from President Mario Draghi this year. “I don’t think it’s accurate,” he said. “The euro zone is not in a situation of Japanization.”
Some economists have cited similarities between the Japanese slowdown that began two decades ago and the euro area’s condition now, including low interest rates, piles of debt and non-performing loans, and aging societies.
Villeroy, speaking in Washington on Thursday at the International Monetary Fund’s semi-annual meeting, cited Europe’s stronger nominal GDP growth, higher inflation expectations, and lower public and private debt as evidence that the region was faring better. He said the ECB is waiting for improvements in the labor market to feed through to price pressures, and that there is a general expectation for growth to recover next year.
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