Now that EuroZone finance ministers have finally approved the next payout to Greece, it looks like the Greek crisis is about to be replaced by the French crisis with an Italian crisis just offstage—and a renewal of the Greek crisis quite possible this summer.
The good news from Europe today is that the Italian government of Prime Minister Enrico Letta might be able to win a confidence vote scheduled, now, for Wednesday. The bad news is that the three other European governments—in Portugal, Greece, and Austria—have come down with their own case of wobbles.
This morning the Greek government asked for more time to complete public sector layoffs required by the country’s rescue package. This kind of delay talk is all too likely to revive criticism in Germany that Greece doesn’t really intend to cut spending and live up to its promises.
So far, global financial markets are willing to overlook deepening debt troubles in Greece and Portugal. After all, these are countries on the “periphery” of the EuroZone and not in the “real” EuroZone. Today’s very gloomy report from the Bank of Italy lowering the projected growth rate for the Italian economy argues, however, that the EuroZone core is in trouble too.
Today the International Monetary Fund cut its forecast for global economic growth in 2013 to 3.1% in its semi-annual update of world economic growth. Back in April the forecast called for 3.3% growth. The IMF also cut its forecast for 2014 to 3.8% from 4%. The reduced forecast can be traced to emerging economies, according to the IMF, with slower growth in Brazil, Russia, India, and China.
In March the troika of the European Union, the European Central Bank, and the International Monetary Fund that has to approve each round of funding in the Greek rescue program left Athens before giving its OK. The troika is due to begin meeting with the Greek government on Thursday and the stakes are higher this time
Unemployment data from Eurostat, the European Union’s statistics office, argue that the EuroZone debt crisis isn’t going away anytime soon no matter how the details are rearranged. Unemployment in the EuroZone climbed to a record 12% in February. That’s up from 10.9% in February 2012. In the wider European Union, the unemployment rate climbed to 10.9% from 10.2% in February 2012.
The finance minister says Greece is out of the woods just as EuroZone auditors arrive in Athens with a new list of austerity measures for a weak Greek government to approve before it gets its next bit of bailout funding
As expected, the European Commission cut its forecast for growth in the EuroZone economies in this morning. The projection now calls for the EuroZone economy as a whole to shrink by 0.3% in 2013.
