Scribd Logo
Importer

Bienvenue sur Scribd !

  • CEBR Which of The Southern European Countries Can Repay Their Debt1

    Transféré par

    Ricardo Leiva
    21 vues1 page
    The failure of the European leaders to sort out their economic problems before going away for August has left Italy and Spain in the lurch. The key to both is that their exports remain fairly successful despite the strength of the euro and most of those owning empty property are middle class families.

    Description originale:

    Titre original

    CEBR Which of the Southern European Countries Can Repay Their Debt1

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Formats disponibles

    PDF, TXT ou lisez en ligne sur Scribd

    Avez-vous trouvé ce document utile ?

    Ce contenu est-il inapproprié ?

    Signaler ce document
    The failure of the European leaders to sort out their economic problems before going away for August has left Italy and Spain in the lurch. The key to both is that their exports remain fairly successful despite the strength of the euro and most of those owning empty property are middle class families.

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    21 vues1 page

    CEBR Which of The Southern European Countries Can Repay Their Debt1

    Transféré par

    Ricardo Leiva
    The failure of the European leaders to sort out their economic problems before going away for August has left Italy and Spain in the lurch. The key to both is that their exports remain fairly successful despite the strength of the euro and most of those owning empty property are middle class families.

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    sur 1

    Embargoed to 00:05am Thursday 4 August 2011

    Realistically, Italy is bound to default, but Spain may just get away without having to do so
    ThefailureoftheEuropeanleaderstosortouttheireconomicproblemsbeforegoingawayforAugusthasleftItalyandSpainin thelurch.PrimeMinister Zapatero hascancelledhissummerholiday;PrimeMinisterBerlusconi,whoseeverydayliferesemblesaClub1830holiday,hasnotactuallygivenuphis ownsummerplanbutismakinganunusualaddresstotheItalianParliamenttoday(Wednesday). ItisimportanttounderstandthedifferentdynamicsoftheItalianandSpanishsituations.Wehavemodelledagood outcomeandabadoutcome for bothtoseeiftheyarelikelytobeabletostaveoffdefault,flexinggrowthratesandborrowingcosts. ForSpain,eventhebadoutcomehasthedebtGDPratioremaining nohigherthan75%.Thisdepends,though,onthebanksnotbeingforcedtotakemajor capitallossesontheirpropertyportfoliosandthereforenoadditionalfinancingofthebankingsectorbythegovernment.Theyhavegotawaywithitsofar. ThekeytoSpainisthattheirexportsremainfairlysuccessfuldespitethestrengthoftheeuro,andmostofthoseowningempty propertyaremiddleclass familieswhohavenotyetdumpeditonthemarket.FingerscrossedbutthereisarealchancethatSpainmayavoiddefaultanddebtrestructuringunlessit getsdraggeddownbycontagion. ForItaly,thecalculationsaredifferent.Thestartingdebtpositionismuchworseat128%.AlthoughMr.Berlusconihasactuallymanagedtorunatight budget,itisstillnottightenough.Andifthemarketscontinuetoforceonthemborrowingcostsataround6%andgrowthstays closetozero,our calculationsshowthedebtGDPratiorisinggraduallytoover150%by2017.Evenifthecostofborrowinggoesbackdownto4%,theirgrowthrateisso anaemicthatweseethedebtGDPratioremainingat123%in2018. Thisispurelymathematical.Becausethebondmarkethasassumed optimisticgrowthrates,itbelievesthatthecriticalbondyieldabovewhichadebt positionisunsustainableisabout7%.Actually,withtheverysluggishgrowthinSouthernEuropeasaresultofthecompetitive hitsthatthecountrieshave takenfromstayingintheeuro,themaximumsustainablebondyieldisnearerto45%. Thebondmarkethasnotsufficientlyfactoredintheimportanceofexportgrowthindeterminingtheplausibilityofdifferentcountries prospects.Ireland provideditdoesnotgethitbycontagion shouldbeabletoexportitswayoutoftroublefairlyeasilybecauseofitstremendousexportingsuccess,though itwilltakea10yearhitonlivingstandards.Spainisinalessstrongexportsituationbuthasasmallerdebtratio(thoughithasaweakbankingsector)and withsomeluckcansurvive. ButGreececannotsortoutitsdebtproblemandrealisticallythesameisthecaseforItaly.PortugalisnearertoItaly,thoughitspositionisonlyabout85% asbad. However,thesedistinctionsbasedoneconomicsandmathematicsmaynotmatter.IfoneEurozone countrydefaults,themarketsarelikelytoputpressure ontheotherweakeconomiesandpushupbondyields.Thiswillinturndragthemdown,makingdevaluatingandthusleavingtheeuroincreasingly attractive,whichiswhywearepessimisticaboutthechancesof theeuroholdingtogether.

    ANALYSIS AND INTERPRETATION OF KEY DATA RELEASES

    Forecasting Eye

    Douglas McWilliams chief executive Centre for Economics and Business Research ltd
    dmcwilliams@Cebr.com 07525 287112
    Centre for Economics and Business Research ltd, 2011

    ThisreportisproducedbyCentreforEconomicsandBusinessResearchltd(Cebr)aspartofourmacroeconomictrends,analysisand forecastingadvisorymembershipservice,theprospectsservice.ThisreportandallassociatedmaterialshallremainthepropertyofCebr andareonlymadeavailabletobonefideemployeesoforganisationswithacurrentandfullypaidupmembershipoftheprospects service.Suchmaterialsmaynotbedisclosedortransmittedtoindividualsororganisationsoutsidethememberorganisationwithoutprior writtenpermissionfromadirectorofCebr.Cebrisnotlicensed intheconductofinvestmentbusinessasdefinedintheFinancialServices andMarketsAct2000.Anyclientconsideringaspecificinvestmentshouldconsulttheirownbrokerorotherinvestmentadviser.Any viewsoninvestmentsexpressedbyCebr,oronbehalfofCebr,areintendedtobegenericonly.Cebracceptsnoliabilityforany specific investmentdecisionwhichmustbeattheinvestorsownrisk.Whilsteveryefforthasbeenmadetoensuretheaccuracyofthematerialin thisreport,neithertheauthorsnorCebrwillbeliableforany lossordamagesincurredthroughtheuseofthisreportorassociated materials.

    the prospects service

    Vous aimerez peut-être aussi