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Growth as well as cuts needed to beat euro crisis: Merkel

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(BERLIN) - German Chancellor Angela Merkel reiterated on Wednesday that the debt-wracked eurozone needed economic growth as well as deficit-cutting measures to pull itself out of crisis.

"In Europe, we are called to overcome the sovereign debt crisis and the consequences of the international financial and economic crisis," Merkel told a conference on raw materials here in Berlin.

"On one hand, that can be done with a sustainable fiscal policy ... but that is a necessary but not sufficient method of overcoming the crisis because we also need growth," added the chancellor.

"We need growth in the form of sustainable initiatives, not stimulus programmes which would increase debt, but growth in the form of structural reforms, as European Central Bank President Mario Draghi said today," she added.

In regular testimony earlier Wednesday at the European Parliament in Brussels, Draghi said Europe needed a "growth compact" in addition to its "fiscal compact" on greater budgetary discipline.

The structural reforms required for governments to make their economies competitive once again would necessarily entail some degree of pain, the ECB chief said.

The comments came as a growing number of eurozone countries are beginning to baulk at drastic belt-tightening measures being prescribed by governments in a bid to rein in their deficits as part of a recently agreed "fiscal compact."

In France, the leading presidential candidate Francois Hollande has called for a re-negotiation of the fiscal compact to include growth measures.


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