All about Greece and other shaky economies May 16, 2010Posted by Yilan in Yunanistan.
Tags: Economy, EU, European Union, Greece
Earlier it was companies that were going bankrupt, now countries are turning belly up. The latest crisis in Greece threatens world’s financial stability at a time when many countries are slowly recovering from the global recession.
Moody’s rating agency has warned of a severe risk of contagion as it expects the euro zone’s debt crisis to destabilise the banking sector in several European Union countries. Stock markets across Europe have already crashed, affecting markets across the world. The euro hit a 14-month low against the dollar.
Concern about soaring government deficits and debt levels, downgrading of European government debt has raised alarm bells again.
On May 10, the Eurozone countries and the International Monetary Fund finally agreed to a $1-trillion financial aid package for Greece, on the condition of implementing several austerity measures. The rescue package is aimed at ensuring financial stability across Europe. Analysts say this could have come earlier to save many other countries from falling into a deeper crisis.
Eurozone countries have total government debt worth 6 trillion pounds. While Germany accounts for 1.4 trillion pounds, while Greece is liable for 250 billion pounds.
However, the crisis is unlikely to have a major impact on Asian economies apart from Japan. While countries like India may be unaffected by the Greece crisis, many countries in the Euro zone face a grave crisis.
”As far as India is concerned, the impact on us will be minimal. In fact, in the short run – that is, purely in the short run – it might help us in terms of India being regarded as a relatively safe haven,” Finance Secretary Ashok Chawla has said.
Moody’s rating agency has warned of a severe risk of contagion as it expects the euro zone’s debt crisis to destabilise the banking sector in several EU countries. The aid package led to markets across the world surging ahead.