The European public debt crisis threatens the world economy 3

The European public debt crisis threatens the world economy 3

The risk of debt default spreading from Greece to Ireland and then to Portugal is threatening the world economic recovery, possibly causing a new financial crisis and requiring emergency support from outside.

Greece is facing two deficit problems at the same time, which is the budget deficit (exceeding 13% of GDP in 2010) and the current balance of payments deficit (about 9% of GDP, compared to the average level of Greece).

In addition, Greece’s outstanding debt amounts to nearly 400 billion US dollars, of which debt due in 2010 alone is 73 billion US dollars.

In March, Moody’s credit rating agency lowered Greece’s debt rating to B1 from Ba1 and said it could lower it further.

The public debt crisis in Europe is increasingly serious

Greece’s heavy dependence on foreign funding has made its economy vulnerable to changes in investor confidence.

Greece has officially called for financial support from the International Monetary Fund (IMF) and Eurozone member countries.

Last week, Ireland released the latest investigation results about its banks.

Ireland’s public debt crisis is not a surprise like the Greek case.

When the real estate bubble burst, the banking system collapsed.

Ireland has become the second country after Greece forced to implement austerity economic measures in exchange for emergency aid from the IMF and EU, in order to get the country out of the worst public debt crisis.

This country hopes that with these economic austerity measures, Ireland will completely solve the public debt crisis, reduce the budget deficit from the current record 32% of GDP to 3% of GDP and

The European public debt crisis threatens the world economy

Ireland had to implement austerity measures in exchange for emergency bailout.

Portugal admitted that the country’s 2010 budget deficit was 8.6% of GDP, much higher than the previously set target of 7.3%.

It is forecast that the Portuguese public debt ratio will increase from 82.4% of total GDP last year to 87.9% of GDP this year and increase to 88.1% of GDP next year.

Moody’s has lowered the Portuguese Government’s credit rating by one level, from A3 to Baa1.

According to a statement released late on April 6 by newly resigned Prime Minister José Sócrates of this country, Portugal, the country officially requested financial help from outside to revive the financial system and economy.

Analysts say that Spain may be the next victim of the public debt crisis with a huge housing bubble and problems related to debt increasing at a dizzying rate.

The news network `Market Forecast` (UK) commented that although Europe is still able to withstand the storm of public debt crisis, the latest developments in Portugal are threatening to push the region’s public debt crisis further.

European Council President Van Rompuy said on March 25 that at the spring summit, EU leaders approved a comprehensive plan to deal with the public debt crisis in the region.

For short-term measures, this option includes the scale and purpose of developing the current aid mechanism, lowering debt costs for aid recipient countries such as Greece, implementing content such as progressing

In addition, EU leaders also agreed to increase financial resources from 250 billion euros to 440 billion euros to ensure practical capital injection capacity for Eurozone countries.

However, the specific plan to improve the ability to inject capital must wait until June this year to be determined.

Nguyen’s gland (summary)

Leave a Reply

Your email address will not be published. Required fields are marked *