New York Times
October 10, 2011
Will the two-speed European economy converge into recession?
There are only two paths for the European economy in the short run – two-speed or no-speed. And the deciding factor will not be the Greek debt crisis but export potential. This is well illustrated by this year’s diverging fortunes among the periphery debtors: Greece is the euro zone’s worst performer, still mired in recession, while Ireland has been one of 2011’s recovery stories thanks to its substantial position as a vigorous exporter.
Last year, too, it was global export success that distinguished the strongest European economies within a two-speed continent, leading to a better-than-expected performance for the European economy as a whole. Both European and U.S. trade have benefited from fast-rising demand in emerging markets, but this has had a greater impact on key European exporters like Germany, where exports represent about half of G.D.P. compared with less than 15 percent in the U.S.
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