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The Periphery Six

Wright, T., (2013), “The Periphery Six”, Project Syndicate, 14 Οκτωβρίου.

Cyprus, Greece, Ireland, Italy, Portugal, and Spain share a problem. With massive debt, no control over monetary policy, and no leeway for fiscal stimulus, they appear headed for a lost decade of high unemployment and low GDP growth. Such a path would drain the political establishment of legitimacy and prevent a real recovery in Europe.

With structural reforms having proved inadequate to deliver sustained growth, a change in the external environment is needed. The most obvious scenario would be for the global economy to grow rapidly enough to rescue Europe from stagnation. But the growth slowdown in emerging economies and mixed economic news from the United States make this unlikely.

 

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