The 7 Major Economies (II)
Written by Alfonso Elizondo
Italy.- Italy has a public debt higher than 130% of GDP and its economy has declined by 3% in the last 10 years. Its banking sector, which includes financial institutions from other parts of Europe, is carrying debts that are very difficult to collect, while its manufacturing sector has failed in the face of competition from China.
Brazil.- In the last decade serious doubts have arisen about the Brazilian economy. Part of its current economic crisis is due to the crisis in Argentina, the decline in economic growth in China which now imports less from Brazil, as well as the falloff in sales to the US as a result of China’s trade war with the US.
Argentina.- After its recent primary elections, Argentina is very likely to return to Peronism, as its stock market saw the sharpest decline it has seen since 1950.
The price of its bonds fell to 54 cents to the dollar, which means that the country is very likely to default on its external debt. Between August 9 and 14, the Argentine peso moved from 45 to 60 to the US dollar.
Argentina’s economic difficulties are not attributable to the latest election results because the country has been in recession for the past year, with inflation of more than 50%. Its poverty rate is now 35% compared to 27% in the first half of last year. This situation is creating major problems for both the current president, Mauricio Macri, and for the Peronist candidacy of Alberto Fernández and Cristina Fernández de Kirchner. Many analysts assume that Argentina will not pay its public debt.
Singapore.- There is the possibility of a recession after its GDP showed a decrease of 3.3% in the second quarter of this year.
According to analysts, this is due to the decline in their manufactured goods and the drop in sales due to the decline in Chinese tourism. So the wonderful Singapore would be another victim of China’s trade war with the US.
Addendum: This crisis encompassing the 8 largest economic powers in the world is likely to explode soon or to continue without causing any problem for many more years to come, especially if there is an agreement between China and the United States.