economics- euro

8/7/2019 Economics- Euro

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PTVAs Institute Of Management

Economic Environment of Business


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NAME ROLL NO

AKANKSHA SAWANT 50

MIRAL SAVLA 49

RINKU PAREKH 38

VAIDEHI GAJIWALA 15

YOGESH PARKEH 39


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` Euro- official currency of theEuropean Union.

` Introduced-1999` Launched coin and Banknote -1st, January 2 2.` ll nations that have joined the

EU since the 1993 was because

of the Maastrichtreaty(1992)` 2nd largest economy in the

world.(Year-2 7)


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Also known as Treaty on Europeanunion

Signed on 7 February 1992 betweenmembers of European community

Led to the creation of EURO.


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` Price stability

` Annual government deficit

` Government debt

` Long-term interest rates.


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` The euro zone consists : Austria, Belgium,

Cyprus, Estonia, Finland, France,

Germany, Greece, Ireland,

o Italy,o Luxembourg,o Malta,o the etherlands,o Portugal,o Slovakia,o Slovenia ando Spain.


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The euro and the single market

Transactions costs Price transparency

Stimulatesinvestment

Increased trade

Investment flows

One market, one money


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` US Housing Bubble:

http://mjperry.blogspot.com/2009/04/house-price-indexes-usa-vs-europe.html


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US ousing Prices peaked in late 2 6

European ousing Prices peaked a year later

Financial Crisis struck Europe & US at sametime in April and July of 2 7

International credit markets froze up inAugust 2 7


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` Greece economy is the 27th largest by GDP

` 34th Largest by PPP

` In 2 , Greece met the convergencecriteria to enter Eoruzone.

` Member of Eurozone andexcepted Euro as currency.


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` Heavy borrowings

` Budget deficit % per year

`

Current account deficits - 9% per year


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` The national debt 3 billion

` Budget deficit for 2 9 from 6.7% to12.7% of

GDP

` Hiding the actual deficit of13.6 percent of GDP


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` Southern Europe

` Spill over Effect

`

Contagion Effect


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` Euro zone leaders and the IMF agree toprovide financial safety net.

` April - euro zone finance ministers approve 3 billion

` May 2 - The aid package amounts to 11billion over three years.

` May 1 - the rescue loans, with . billionbeing provided immediately.


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` May 18 - Receives a 14. billion loan fromthe EU.

` August - Green light for a fresh 9 billion euro

` Feb - EU and IMF inspectors give the greenlight to Greece for a new 1 billion

` Budget deficit to 3 billion euros in 2 1


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` The Celtic Tiger-199 -199 the GDP was growing at afaster rate as compared to other GIIPS.


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1995-2000 growth in

Ireland accelerated

to an avg of 9.6%.

` Irish wages grewresulting in RealEffective Exchange

Rate(REER).` Residential

Investments grew inmid-199 s from %

to 12% in 2 7.


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` Domestic demand fellby 16%` Investment collapseby 40%

` Housing prices

plunged 30%Nationalized AngloIrish Bank announcedloss of 12.7 billioneuros.

` Total Assets of

Guaranteed banks arevalued at 2700% ofavg yearly net debt.

` Unemployment was upfrom 8.75 to 11.4% in2008.


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` Austerity plan announced :cut of 1 % inIrelands Social elfare Budget

` Elimination of nearly 2 public sector

jobs.` VATraised at 23%.` Income tax to rise by 1.9 billion euros.` Bailout package to the total of 8 billion

euros.


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` 199 -199 GDP had grown at an averageannual rate of almost 4 %.

` Portugal's membership in EU on 1 January1999

` the process of monetary integration hasbrought forth a number of imbalances

` GDP growth averaged .8


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` hit by difficulty paying the debt maturity

` refused to ask for emergency loans

` Portugal need emergency assistance

`

government was confident about Portugalcould solve the problem independently


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` GDP to contract by 2.7 percent in 2 9

` cost of borrowing increased up to more than

7%

` Unemployment reached 1 .7 % in 2 9

` public finances debt level reached 86percent.


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` The bond market pushed up the interest rate

` Portuguese government that it would reduce

the fiscal deficit.

` The government will sell 6 billion euro's ofassets to ease the debt burden.

` The government will present its 2 11 budgetto parliament


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` Civil War Leads to Franco's Rule and theReestablishment of a Ceremonial Monarchy.

` Spain Joins the EU andAznar's PopularParty Comes to Power.

` Terrorist Bombing inMadrid Leads to

Socialist Party Government


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It is 9th largest country as per GDP all overworld and th largest in Europe

Most dynamic country in EU attracting hugenumber of foreign investors.

Estimated in 2 7, that Spain would

overtake countries like Germany by 2 11.

Few weak points of Spain like high inflation,etc


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` Employment crisis

` Inflation


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` Economic ties

` Real estate

` Banking regulation


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` Whooping 420 billion euro for coming out ofcrisis.

` Role of China to help spain to come out of crisis.


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` Indias exports to Europe could witness aslump close to 1 %

` Export driven sectors such as textile and

software are likely to bear the brunt.` About 22-28 % of revenues of Indias top

tech majors come from Europe whoserevenues will definitely be affected.

` Governments overall target of $2 bn forfiscal be at stake.


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` Either the euro zone should go for integratingtheir economic policies.

OR

` It collapses, and the Greeks and otherprofligate countries devalue and

banks(German, French, British and American)lose hundreds of billons.


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` Problems It combines efficient and indiscipline economies. Too high debts Political problems

` Solutions Countries affected must:

x Grind down wagesx Raise Productivityx Slash Spendingx Raise taxesx Transparent banking systemx Endure such Austerity drivers for many years


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` The US crisis led to Global financial crisis,which further spread to Euro Zone andcaused Euro Zone crisis, as these countries

were most affected.

` Hence the Big Brothers should help the

countries in problem to come out from thecrisis.


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THANKYOU!!

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