Sunday, February 15, 2015
Eurozone economy sees growth pick up
Germany once again bringing the Eurozone's economy up after its strong growth during the fourth quarter at 0.7%, and 1.6% over the year of 2014. Economist Christian Schulz suggested that the weaker euro and lower oil price amongst other things are helping German domestic market to do a lot better than predicted, despite spillover effect from Russian and Greece. Meanwhile Greece is amongst the only three countries of the region to record contraction during the year. Potential of a new recession seems inevitable and talks will be in place soon about another bail out by the Eurozone.
Personally i think Germany economy is too big to fail, and they have continually proved that they can still carrying the whole region's economy on their back. In 2015, I expect Germany to maintain a steady and slow growth rate. On the other hand, Greece seems to be nearly at its rope and I don't think they can hold off any longer, even with more loans and aids from other European countries. I believe it is better for Greece to leave the Eurozone and start restructuring their finance and economy. It might be bad in the short term, but over the long term the economy should get better.
http://www.bbc.com/news/business-31451879
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5 comments:
I agree with your stance on Greece leaving the Euro. Germany and other countries in the EU have continually used their resources to attempt to save Greece from slipping further. However, it seems that Greece may be beyond saving and the EU should begin focusing on steady growth and preparation for another market correction on the horizon.
I agree with both of the opinions on this topic. It is interesting to see that some economies of certain countries can show signs of growth where the whole Eurozone economy is still struggling. I do also believe that Greece's time has come and they have exercised their last few options to save their economy while still being in the EU. I think it would be best for Greece to leave the EU and hit the reset button on its economy. If Greece did this, could the rest of the EU show signs of faster economical growth because Greece would be one less country holding the Eurozone from improving?
I think that Greek exit from the Eurozone is a terrible idea because of the very dangerous precedent that it would set for other countries or partial countries who may want to leave and rejoin (Scotland, Cataluna, etc.) the European Union in general. Additionally, it would mean an exit of Greece from the EU as a whole not just the Eurozone.
At this point, Greece leaving the Eurozone would mean that it would also exit the European Union or become a member with derogation (ie. not a full member of the EU). This is because member states that joined the EU since 2004 are automatically part of the Economic Monetary Union, according to the EU website EUROPA, which means that they agree to coordinate their economic policy with other member states and that their central banks are part of the ESCB. (this is cited in both http://ec.europa.eu/economy_finance/publications/publication6730_en.pdf and Article 139 and Protocol 13 of this document: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:12012E/TXT )
Therefore, Greece is technically very in the wrong and is going against what the EU is now as a whole, not just the Eurozone area. If it leaves, then it will lose all of its say as an EU member which could have HUGE ramifications socially, politically, and economically.
Maybe leaving the Eurozone is a drastic change and could lead to numerous downfalls, I think staying in the Eurozone over the lone run with current austerity that Germany and the EU demands is not going to do much work to Greece either. They might be slowly dragging down a spiral hole of recession for long years to come, barely to feed on aids from the Euro countries. I think the Greek government realized that and that is why they have been rejecting to comply with the demanded austerity
That's very true. There is a medium. Germany needs to loosen a little bit, but the austerity can't just go away either. There needs to be a consequence or at least a restructuring of payments. They should be smaller and more manageable for the Greek people. However, just forgiving a debt is a bad precedent to set for fiscal policy in the EU. There should be help provided in terms of jobs and industries moving to Greece to help with the unemployment problem or anything else. But Greece has to be somewhat held accountable for payments that it agreed to.
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