Euro region new record of unemployment and more pain in Spain

Euro region new record of unemployment and more pain in Spain

Brussels : Belgium | Apr 02, 2012 at 6:39 AM PDT
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As we previously discussed based upon a version of few economists "Euro Zone financial Crisis won't resolve soon" now it has about to be proved. When a month turns, financial status of the EU comes with more negative indications. Few days back "Office for National Statistics" of UK declared contraction of economic growth by 0.3%. Moreover, annual growth for the year 2011 has also been reduced to 0.7% which was announced 0.8%. Household goods like cloths and footwear also downed by 0.4%.

Undoubtedly, financial crisis is not about to fix as we pray but soaring and further justified by new unemployed rate of EU that is 10.8% in February 2012, which upgraded from 10.7%. The unemployment rate is a bitter experience of region after a common currency carried in 1999. As reported manufacture sectors of areas contracted in February. In case of France, home country of many IMF chief, it is lowest level of manufacturing compared to last three years. Manufacturing sector is one most key area of job creations but found reduced, which automatically indicates contraction of job markets. On the basis of unemployment Spain ranked one with 23.6% where Portugal, France , Italy and Germany follows with 15%, 10% , 9.3% and 5.7% respectively. But few countries like Austria and Netherlands have lowest unemployment rate 4.2% and 4.9% respectively compared to other countries. Unemployment rate of EU is tangible problem of EU but intangible economic hurdles of many developing countries. Since many developing countries are highly dependent upon remittance.

At the beginning of year 2012, manufacturing sector was supposed to be acted as a pull on economic enlargement in the region but found falling to a lesser degree compared to final quarter of last year. As a result GDP of the region will be also contracted for first quarter of 2012. As major playing factors, losing confidence of business leaders is one prominent cause and an agreement of rescue fund may play to boost responses of investors. As an agreement of rescue fund EU agreed to increase the joint providing power of the firewall from 500 billion to 800 billion euros which is the undying instrument to post security worried Euro zone nations.

Financial crisis has become a much headache problem of EU and whole world has experienced pain indirectly. And Spain is in top of all pain but why? Recently, EU's fifth largest economy Spain, has disclosed its budget for 2012 and 27 billion Euro has reduced from the budget as part of a tough severity constrain of economy. The budget announcement took place among general strikes and paralyzed growth. Some analysts expressed fear Spanish bailout and current provision of rescue fund can not cope with Spanish crisis. As history, Spanish government's borrowing was zero and worked with balanced average budget till 2008 at the period economic growth was also found rapidly growing as well as decreasing debt ratio. When Spain attached with the Euro, interest rates fell to the lower levels especially in Germany and the Spanish government refused to go along with the lure of cheap loans, most normal Spaniards did not. Then Spain experienced a long boom, under fasten by a housing bubble, as Spanish households took on bigger and bigger mortgages. Houses prices gone up by 44% in 2008 than in 2004. And suddenly burst and fallen to 17%. The trend of annual economic growth was 3.7% on and average on the passage of time 1999 to 2007 later amazingly contracted in 1%. That is why, mis-tuning of interest rate with Germany can be taken as initiation of Spanish balance crisis.

Few Economists said, Euro zone economy will get smaller in 2012 as Spain , Italy, Greece, Portugal, Belgium, Cyprus, the Netherlands and Slovenia all countries narrowing its economies. However, amid of all these financial hurdles, Euro region may not go in economic recession but some economists disagree with the version. But predicts probably EU will have to tackle again with recession.

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U.S. President Barack Obama meets with members of the Business Roundtable to discuss jobs and economic growth in Washington D.C.
U.S. President Barack Obama meets with members of the Business Roundtable to discuss jobs and economic growth in Washington D.C.
Dadhi Aryal is based in Kathmandu, Kathmandu, Nepal, and is a Reporter on Allvoices.
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