7 de novembro de 2011


O bold e o sublinhado são meus. 

[....] And the descent into recession seems to be continuing for the euro area. Retail sales across the currency area plunged in September. Perhaps more disconcertingly, Germany's industrial production dipped 2.7% for the month. This is a very bad scenario for the single currency. The periphery is plunging into austerity. To have any hope of economic growth, which will be necessary to translate fiscal cuts into an actual improvement in budget sustainability, peripheral economies must significantly increase the contribution of net exports to growth. But these economies overwhelmingly export to each other. About 50% of Portuguese exports go to Spain, Germany, and France. Nearly 50% of Spanish exports go to France, Germany, Portugal, and Italy. Roughly a third of Italian exports go to Germany, France, and Spain. Roughly a third of French exports go to Germany, Italy, and Spain. Of the large euro-zone economies, Germany's exports are sold to the broadest and most diverse portfolio of customers. Nevertheless, over a third of its exports are sold to the euro zone, and its two largest non-euro customers are Britain and America, neither of which is in great economic shape and both of which would also like to increase their net exports.

So one key problem is that troubled euro-zone countries would all like to sell more to other troubled euro-zone countries whose economies are shrinking. They'd also like to sell a lot more to Germany, and indeed, Germany should buy more from the south as part of a broad euro-zone adjustment. But Germany's economy may also start shrinking thanks to the poor outlook for most of its export customers; a big fiscal expansion could offset this but is highly unlikely to materialise. The rich world as a whole would love to start selling lots more to China, but China is (understandably but unfortunately) uncomfortable with that, at least in the very short term.

While those among the world's large economies with the ability to signficantly increase domestic purchases are unwilling to do so, there will be substantial contractionary pressure on depressed rich economies. That dynamic will be unpleasant for countries like America and Britain. But it may well prove fatal for the euro zone.

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