2011 Debt Crisis and the Economic Outlook in Europe4 min read
2011 in Germany, France and other euro-zone economy, driven by major countries, GDP growth will be close to 2%, a slight improvement over 2010. Spain does not need outside help currently, even if Spain needed help, the European Union, IMF and the European Central Bank will also aid as soon as possible to prevent the spread of the crisis. Therefore, the debt problems of the periphery of Europe will hit the market from time to time, but far from the negative impact of the debt crisis will not be as big of Greece.
Eurozone growth will be slightly improved
In 2011, the euro-zone economic growth will continue to divide countries, major economies and the edge of the national show economic situation.
Terms of the major countries, Germany and France to the good momentum of economic growth, including the following aspects: First, the pace of recovery between German and French manufacturing faster, PMI index showed a steady upward trend in overall; Second, German and French real estate market improved significantly, Germany has approved the corresponding value of residential construction rose in recent months were more than 5%, the French houses and apartments in the number of months available for sale fell to normal levels in history; the German job market is better than the United States, Germany’s unemployment rate from January 2010 to 8.1% to 7.5% in November.
However, by the debt-crisis countries, the euro zone’s fourth largest economy, Spain’s economic situation is good. Spain, some of the economic leading indicator, such as industrial new orders, consumer confidence index and business confidence compared to 2009 has shown a significant improvement. The economy of Portugal and Greece lack of endogenous growth momentum, coupled with financial constraints, these economies will remain sluggish in 2011, economic growth will be below zero.
Therefore, on the whole, Germany and France account for the total economy of the euro area and half, they will continue to play the “locomotive” role, while some marginal country’s economy still plagued by financial constraints, economic growth slower, such as Greece and Portugal. As Greece, Portugal and the economic aggregate of less than 5% share in the euro area, the drag on economic growth in the euro area as a whole is very small. 2011 in Germany, France and other euro-zone economy, driven by major countries, GDP growth will be close to 2%, a slight improvement over 2010.
The second round of the debt crisis may not be.
2011, the biggest risk to the global economy is that the debt crisis in Europe, if a second round of the crisis on the global economic recovery and trends in global capital markets have a tremendous impact. Furthermore, there is likely to set off the crisis in Portugal and Spain.
Portugal as the economy there is a structural problem, its economic foundation is weak, since the subprime crisis slow pace of deficit reduction, progress as Spain and other countries. Its financing needs in 2011 was 385 million euros in the euro area GDP, one of the highest level in a country, coupled with its market has been in increase in state financing costs, the financing of the Portuguese in 2011, the pressure can not be optimistic, and ultimately may seek EU and IMF assistance. We believe that in 2011, Portugal will make the market risk of financial whirlpool of emotions has increased over time, but because of its economic output is small, negative impact on the market similar or lower and Ireland.
Will happen in 2011 is similar to the first half of 2010 as severe debt crisis in Europe, we have to pay close attention to Spain. Spain is the euro zone’s fourth largest economy, the economies of scale are Greece, Ireland and Portugal, and three of the double. If Spain, a huge fiscal deficits in the future or a bank of large-scale collapse of the European Union, IMF and the ECB did not provide timely and effective assistance, then Europe will usher in the second round of the debt crisis, while a major impact on global financial markets.
We are from Spain’s government debt, the banking system and economic growth conditions to assess aspects of the possibility of its crisis. Spanish government debt situation is moving in the path of sound development. First of all, the Spanish GDP, government debt is currently just over 60% of the internationally recognized warning line, the edge over other European countries are low. Second, Spain’s fiscal revenue in good condition for years to lay the foundation for the implementation of fiscal consolidation plan. Third, Spain’s fiscal deficit in recent months has been in decline. Finally, the Spanish government debt held by foreign investors, a smaller proportion, to a certain extent, can inhibit the panic sell-off caused by irrational behavior.
Spanish banking system is not bad. Since 2009, the Spanish banking system’s capital adequacy ratio showed a trend of rapid recovery, has now returned to normal levels in history, in more than 8% of Basel II. Spanish banking system had better functional recovery of credit, its private sector lending growth in 2010 year on year there is growth, support enhanced economic growth.
From Spain to the current financial situation and the banking system and deeper economic growth data, the current Spanish does not need outside help. Even though the Spanish in case you need help, because of its economy in the euro area play an important role in systemic, although the high cost assistance, the EU, IMF and the European Central Bank will soon Shishi assistance to prevent spread of the Spanish crisis contagion effect caused.
Therefore, the debt problems of the periphery of Europe from time to time the market will be a slight increase in risk aversion, but its far from the negative impact of the debt crisis will not be as big of Greece.