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8/20/2019 Challenges With Eu Countries
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Europe in 2015: Uncertain, Uneven and Unpredictable
The “sick man” of Europe may very well be all of Europe. Since the Great Recession of
200!200"# $rowth has been $enerally slow an% painful# an% the %an$er of prolon$e%
sta$nation in Europe is a very real possibility. The euro has %roppe% to its lowest value
in nine years. &ith Europe accountin$ for 2'( of $lobal tra%e# its recovery is imperative
to the health of the $lobal economy. The forecast for 20)' is lookin$ %ismal# only
mar$inally better than 20)*.
“+rankly# it,s very har% to be optimistic about Europe. There are lots of issues#”
says -auro Guilln# &harton mana$ement professor an% %irector of The /au%er
nstitute. The continent is facin$ a “%eceleration of the German economy. Southern
Europe is not workin$ as it was suppose% to an% there are lin$erin$ problems with hi$hunemployment an% hi$h ta1es#” Guilln a%%s.
nless there is a %ecisive chan$e in structural# fiscal an% monetary policies# Europe may
continue to lan$uish in the upcomin$ year# accor%in$ to the 3r$anisation for Economic
4o!3peration an% 5evelopment 63E457. “Europe is at the center of weakness in the
$lobal economy Twitter #” says 4atherine /. -ann# the 3E45,s chief economist. The
institution forecasts $rowth in the euro8one to be 9ust ).*( in 20)'. That,s an
improvement over the low 0.:( for 20)*# but it,s well below what Europe shoul% beachievin$.
/ast year# the overall worl% economic $rowth rate stoo% at ;.)(.
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8/20/2019 Challenges With Eu Countries
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?y havin$ several countries %rastically re%uce their %eficits all at the same time# $rowth
was un%ercut an% the a%9ustment has been incre%ibly painful. t,s a 4atch!22#
notes 3livier 4hatain# strate$y an% business policy professor at BE4 business school in
=aris an% senior fellow at &harton,s -ack nstitute for nnovation -ana$ement.
“Frankly, it’s very hard to be optimistic aboutEurope. There are lots of issues.” –Mauro Guillen
“/ow inflation an% %eflation are becomin$ ma9or problems#” 4hatain notes. The
inflation rate has “been very far below the European 4entral ?ank,s 2( tar$et for a very
lon$ time# which makes %ebt consoli%ation much more %ifficult.” nflation has staye%precariously low# hoverin$ at 0.;(. Spain an% Greece have actually been in %eflation# a
tren% that coul% sprea% to the rest of Europe.
nemployment in Europe# with the e1ception of the .C.# is in the %ouble %i$its an% not
forecast to %rop until 20)D. as $oo% as it in the .S. > than it was in
the )""0s.”
Bowever# within Europe# countries with very %ifferent personalities are contributin$ to
an unstea%y recovery effort that is affectin$ the entire continent.
http://knowledge.wharton.upenn.edu/faculty/chatain/http://knowledge.wharton.upenn.edu/faculty/chatain/http://mackinstitute.wharton.upenn.edu/http://knowledge.wharton.upenn.edu/faculty/guillen/http://knowledge.wharton.upenn.edu/faculty/chatain/http://mackinstitute.wharton.upenn.edu/http://knowledge.wharton.upenn.edu/faculty/guillen/