Editor’s Note: This week, CNN International will be examining “The Future of Europe,” a look at the debt crisis as the eurozone faces another week of critical meetings that may impact the future of the 17-nation monetary union.
Story highlights
Nissan CEO: ECB decision buys eurozone time, but problems remain
Ernst CEO: Europe won't return to growth for "four or five-plus years"
Ghosn: China will be impacted by EU slowdown, but will be a "soft landing"
Carlos Ghosn, the CEO of Nissan Motor Co., said that while the European Central Bank bond-buying program will help buy time, what the eurozone needs most is a return to growth.
“Without any doubt the decision made by the central bank will give breathing room – but it doesn’t solve the problem. It gives us more time to solve the problem,” Ghosn told CNN on the sidelines of the World Economic Forum in Tianjin, China, this week. “The hard choices have to be made and they have to be implemented mainly in order to gain back the competitiveness that Europe needs.”
Still, the challenges look formidable for Europe in the next few years.
“I think the Europe situation is more complex than most people really realize. A lot of talk – mostly about sovereign debts – but beyond that I see very little prospects for growth in the near term – call it four or five-plus years (before a return to growth),” said Jim Turley, CEO of global accounting giant Ernst & Young.
The decision by Germany’s Constitutional Court Wednesday to dismiss a complaint against Europe’s permanent bailout fund helped ease pressure on borrowing costs for Italy and Spain, the countries next in the firing line of Europe’s sovereign debt crisis. The fund is a crucial part of the ECB’s plan, announced last week, to buy bonds to help European countries when market forces push bond interest rates too high.
Ghosn says he is untroubled by the at times fractious debate in the eurozone between wealthier nations and their more troubled neighbors.
“I think there is enough wisdom and willingness to continue to live together in order to make mutual concessions which are necessary to hold Europe together. I’m not worried about that – what I’m worried about is the speed at which we are solving the problems in Europe,” Ghosn said. “We need a little more speed a little bit more determination to get out of the situation where the economy is stuck at 0%.”
The slowdown in the economy of China has been tied to the slowdown in the European Union, Beijing’s largest trading partner. But Ghosn believes the nation is headed “without any doubt” to a soft, rather than hard, landing thanks to domestic growth.
“(The) European market is in recession. This year, no doubt, will be in recession: -1% or -0.5%. And even though Europe is in recession, even though the U.S. is far from its potential … China will still deliver 7.5% growth. Yes (China) depends on other economies but it has enough substance by itself in order to continue to develop and to grow with the internal market,” he said. “It’s already the largest car market in the world, with more than 18.5 million cars and light commercial vehicles sold.”
