Business/Economics News Analysis
Greek Crisis - an analysis By Sharmi Sheth, IB graduate 2014 batch
As the debt crisis continues to grow in Greece, other nations are likely to be impacted by the ripple effect in the near future, if the country does not seek for a settlement with its creditors and decides to quite the Eurozone. If continued, this could lead to a further deterioration of the Euro and hence heavily impact their trading partners. In the long term, this could further impact the global commodity markets, causing exchange rate fluctuations worldwide.
Current Scenario: In spite of the dull Greek economy, the overall financial status of the Eurozone seems to be stable with the growth rate at 0.4%. However, this is largely due to Germany’s rapid growth, it being one of EU’s biggest economy. With the deteriorating condition in Greece, EU still seems to have prospering economic growth and high job creation.
Future Consequences: If Greece decides to quit the EU, even though it makes up less than 2% of the total economy of Eurozone, it could cause a severe damage to other fading nations such as Portugal and Spain. It would force them to have higher borrowing rates and greater selling of bonds. In future, other nations could follow the same steps in case of crisis, leading to a break-down of the EU. On the other hand, it is possible for Greece to gain financial autonomy by quitting and with sustained efforts the other countries would still be a part of Eurozone, not causing any severe effect.
As mentioned time and again, “It’s the Greek people’s right to say what they want their future to be. It’s about whether the Greeks want to stay in the Eurozone or take the risk of leaving.” However, this decision will affect the country’s cultural and political identity for years together now. Hence, with the new IMF reforms, policies and other decisions, they should primarily focus on the long term growth and development of the nation.
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Current Scenario: In spite of the dull Greek economy, the overall financial status of the Eurozone seems to be stable with the growth rate at 0.4%. However, this is largely due to Germany’s rapid growth, it being one of EU’s biggest economy. With the deteriorating condition in Greece, EU still seems to have prospering economic growth and high job creation.
Future Consequences: If Greece decides to quit the EU, even though it makes up less than 2% of the total economy of Eurozone, it could cause a severe damage to other fading nations such as Portugal and Spain. It would force them to have higher borrowing rates and greater selling of bonds. In future, other nations could follow the same steps in case of crisis, leading to a break-down of the EU. On the other hand, it is possible for Greece to gain financial autonomy by quitting and with sustained efforts the other countries would still be a part of Eurozone, not causing any severe effect.
As mentioned time and again, “It’s the Greek people’s right to say what they want their future to be. It’s about whether the Greeks want to stay in the Eurozone or take the risk of leaving.” However, this decision will affect the country’s cultural and political identity for years together now. Hence, with the new IMF reforms, policies and other decisions, they should primarily focus on the long term growth and development of the nation.
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Read more Economics and Business News Analysis
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We kindly acknowledge use of materials from various websites, books, journals, etc.