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The coming depression blog | May 19, 2019

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Risks faced by the European Economies

Risks faced by the European Economies

The European Economy is a major worry for the revival of the growth story internationally. There are many economic concerns that are coming out of many countries within Europe that shows that these economies are very vulnerable when it comes to economic prospects in the near future. There are various problems facing Europe economically today and as it is one of the largest economic zones in the world, economists around the world are keenly following developments in Europe to see its impact on the global economy. The following are some of the problems faced by the European economy today:

Risks and Problems Faced By European Economies
•    Italy which is one of Europe’s largest economies is back in recession in 2014 after it recorded a negative GDP growth for two quarters in 2014. This is the third time Italy is in recession since 2000 and there is economic gloom and need for structural and policy reforms in the country.
•    Russia is one of Europe’s largest trading partners and a large region of Europe depends on Russia for energy resources. The geo-political tensions in Ukraine and the economic sanctions that have been imposed on Russia by the Europe and United States followed by counter sanctions by Russia can hurt the European economy.
•    Demand is low in many of the European economies and also inflation is falling. High inflation is bad for the economy and so is reduction in prices of goods and commodities.  This affects the overall growth of the economy and ability of European countries to pay off debts.
•    Many countries in Europe have extremely high unemployment rates. Countries like Greece and Spain have recorded unemployment rates in the mid-twenties this year and other countries like Italy and France have recorded double digit unemployment rates.
•    The economies in Europe have to realize that they are now in competition with developed economies as well as developing economies all over the world. Countries like Italy and France have to become more competitive.
•    The German economy which is one of the strongest in the Eurozone has shown some weaknesses in 2014 which is a worrying sign for Europe. Growth in Germany fell slightly as compared to the forecast at the end of June this year. Though there has been some positive news regarding the economy since then, this drop in GDP is troubling.
Europe needs to take some drastic steps to improve competitiveness and also improve demand in the economies within the continent.

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