Euro zone may collapse if states reject reforms: German trade association

BERLIN (Reuters) - The euro zone could break up if people living in crisis-stricken southern European countries do not accept structural reforms in the coming years, the head of Germany's BGA trade association said on Monday.

Anton Boerner also dismissed concerns that Germany, Europe's largest economy, could sink into recession in 2012 and said he expected German exports to increase both this year and next.

"If people do not say yes (to structural reforms), then the euro will not be able to exist in its current form," Boerner told Reuters in an interview.

"If the southern European states say yes, we accept the challenges ... then the euro will be stronger than ever before," he added.

Euro zone investor sentiment improved this month for the first time since March thanks to the European Central Bank's plans to rescue the common currency by buying the bonds of vulnerable member states, Sentix research group said on Monday.

Boerner said he did not expect Germany to sink into recession this year despite the Organization for Economic Cooperation and Development's forecast last week that Germany would contract in the second half of this year.

Economic growth slowed to 0.3 percent in Germany in the second quarter and many economists predict a contraction for the third and possibly the fourth quarters.

Boerner said he expected German exports to increase by "a good four percent" this year.

"Under no circumstances do I see them (exports) stagnating or falling," he said, adding that whether or not exports grew more than this depended on the development of the euro zone crisis.

Data published last week showed German exports and imports edged higher in July, highlighting the continued resilience of Germany, the euro zone's growth locomotive, to the region's debt crisis.

(Reporting by Gernot Heller; Writing by Michelle Martin, Editing by Gareth Jones)

Source: http://news.yahoo.com/euro-zone-may-collapse-states-reject-reforms-german-094205720--business.html

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