Chapter 7: Partnerships in Europe
The status of European economies has become the focal point of great trepidation around the world. While a part of the industrialized world, European nations are facing economic crises. Some nations, such as Germany, are better positioned to continue economic growth, while others, such as Greece, face much dimmer prospects. These nations are linked economically, despite their varied paths to development and innovation into the future. Intervention by central banks in European nations has led to fiscal austerity to weather a deep economic downturn. Nevertheless, the future of European economies will still require some degree of innovation and growth. Europe is no exception within the context of a global economic slowdown, but the deep links between European nations and the rest of the world demonstrates the extensive interdependence within the world’s economy. According to the IMF’s World Economic Outlook, global fiscal policy would continue to tighten in 2012, though to a slightly lesser degree than in 2011, and advanced economies would suffer the most tightening, while emerging economies would experience substantially less. Gross-debt-to-GDP ratios were predicted to rise further in Europe’s many advanced economies, with G7 economies experiencing the sharpest rise. Sharper than expected slowing of growth in the euro zone in the last quarter of 2011 was due to concerns of an escalated euro area crisis: several measures were adopted in response: long-term refinancing operations (LTROs) by the European Central Bank, strengthened fiscal com- pact, structural reforms, fiscal consolidation, and steps to enhance the European firewall.
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