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- The Global Economy - February 16, 2012
The Global Economy - February 16, 2012
16-02-2012 13:52
The euro zone is the global economy’s sinkhole – Greece is more important than its economic size
- GDP is shrinking in the euro zone, the UK and Japan, while the US recovery is gaining steam and emerging economies remain in high gear – though not the highest any longer. The purchasing managers’ index and OECD’s leading indicators signal a slight pickup, but it is too early to call it a turnaround. For that to become a reality will take greater confidence in the euro zone's handling of the crisis.
- The ECB’s actions are a big reason for the improved risk appetite and stability of the financial market in the euro zone. They have bought time for politicians, but reforms will have to be implemented to strengthen growth. Especially in Greece.
- A Greek default and euro exit wold be costly for Greece, but would also hurt the euro zone, since the stability fund isn’t big enough to stem contagion to other crisis countries. Dissension in the euro zone and a “renationalisation” of politics could jeopardise the integrated market in the longer term.
