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The following article was published in our article directory on December 2, 2010.
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Article Category: Business Management
Author Name: xia zihui
In last month's G20 summit in Seoul, the U.S. Treasury Secretary Timothy Geithner 4% of the initial proposed concept, that is, an economy's trade surplus or deficit of more than 4% of its GDP, is uneven. However, this conclusion is not the summit, the IMF decided to give a future standard. But this standard can not be too absolute, because the balance and imbalance, but also with the weight of the economy, and to measure the duration of the imbalance. A small economy, even if the net current account more than 10% of its GDP, the world has no effect. Similarly, if a large economy, even its current account net worth exceeds 5% of its GDP, but the short duration, such as only one-quarter or even a year, and that the economy can not say that the economic imbalance. However, if such a large EU economies, the long-term trade surplus or deficit, even if the net annual current account only 1% of its GDP, cumulative impact of very large, in fact, is uneven.
However, the EU as a whole, on the surface, virtually no economic balance pressure. Last year, the EU-27 trade deficit amounted to 111.703 billion euros, accounting for the proportion of GDP was 0.94%. 15 euro's trade surplus is 14.905 billion euros, accounting for 0.17% ratio of GDP, well below the 1% level.
However, if EU member states from the point of view, the situation of economic and trade imbalance is very serious. Germany has the world's biggest exporter in 2007 and 2008, the proportion of GDP, its trade surplus reached 8.03% and 7.20%, in a serious surplus state. Financial crisis, German exports being down, but in 2009 this proportion is still as high as 5.80%. This year, German exports pick up, the first half of the GDP, trade surplus reached another high of 6.07%.
Typically, if a country's trade witnessed a serious trade deficit, currency devaluation fully to achieve through their balance or even surplus. However, after joining the euro, Europe is precisely these countries lost their currencies, they can not use the euro led. The ups and downs of the euro, mainly by Germany's circumstances. But Germany is a long-term trade surplus with major countries, so the performance of the euro has been strong. Therefore, these countries remain in the euro one day, you have to take a day trade deficit of torture.
Correspondingly, the euro zone trade deficit with that country's increasing economic trade declines, rising unemployment, financial and social problems have become increasingly acute. Portugal has an unemployment rate reached 10.90%, a record high of 30 years, but also showed higher trend. Spain, the unemployment rate in the first quarter of this year more than 20.00%. Greece breakthrough double-digit unemployment rate in November last year and is currently 12.23%. In fact, even Italy and France, the unemployment rate is also high, currently at 8% and 9.50% or more.
Euro-zone countries is also due to loss of independent monetary, exchange rate, thus losing the market and the power to decide on interest rate policy, so those who trade trade deficit with the country only through the financial means to regulate the economy. And because the trade deficit in the state and therefore increase the deficit is the result of expansion of public debt, triggering a sovereign debt crisis.
The unique design of the system in the euro zone, the EU is almost no solution for the imbalance, the euro zone countries could barely see the edge of the hope out of the woods. Currently Greece, Spain, France, fiscal austerity, the road is right, but the future of space is very small, not to mention the national will was strong opposition. If the euro does not break, Germany will continue to grab the huge benefits of other countries, even those peripheral countries France, Italy and the trade deficit will continue to bear the pain of the double deficit, endured the pain of high unemployment. Long-term maintenance of the euro area, must make a series of crises in these countries broke out, and Germany will have to shoulder their heavy burden of assistance to other countries. Domino effect, eventually crushed Germany. Therefore, Germany's trade surplus to get the benefits of other deficit countries will each return, but the deficit countries and Germany, will taste the bitter fruit in the process.
This Jietai can not last forever painful process. Either the euro area and the EU into a completely unified federal state with a very centralized, unified national unconditional commitment from the original location of the periphery of all the problems. Even if this trend continues, there can not be done for decades. However, the EU and the euro zone caused by the imbalance problem has been explosive, how could again and again for decades? Then the second possibility is that either some countries out of the euro, or the disintegration of the euro zone. If it is marginal country can not afford a huge double deficits and high unemployment, then out of the euro in these countries, through national bankruptcy or debt restructuring, as can be relieved the burden of re-issuing currency, economy back on again. And if Germany really can not tolerate or bear the endless, huge burden of assistance, then the German out of the euro, so Mark Easter, a weak currency to the euro, so that the edge of the national economy that deficit and get angry.
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