International Political Economy (Spring 2013)

Recently, the numbers of the Eurozone's last quarter came out, and proved to be a bit of a shock to analysts everywhere.  While most were expecting negative numbers, it turned out to be worse than most would have predicted.  The biggest shock was the EU's economic powerhouse, Germany, also took a hit in the last three months of 2012, as it's economic output decreased by 0.6%, according to a BBC editorial.  Overall, the entire Eurozone also saw a decrease in output of 0.6%.  These numbers mark the end of a "dismal" year for the European economy, and many analysts are watching to see how this will continue to play out.

If this economic crisis in Europe is starting to hit Germany, than one can only imagine the consequences for weaker nations, such as Italy.  This is especially true as the nation's presidential election draws near.  One of the greatest issues for the voters is how the new leader will fix the economic crisis that predecessors like Berlusconi created.  Even just days before the polls opened, many voters were still undecided about who they would choose-one statistic indicated as many as 30% of the eligible population of women did not have a set opinion yet.  This type of chaos indicates the fear many have  for the future of the their nation as well as the European community.  The new leader will essentially be responsible for saving Italy, and voters need to make the most prudent decision.

There is some good news in the Eurozone, however.  Spain, one of the nations largely responsible for Europe's financial crisis, is in some ways a lot better shape than it was in six months ago.  Outside investors are beginning to invest in the debt, and the primary deficit is also coming down.  One the other hand, however, growth and output is not getting better.  It's not a good situation for anyone.

This lack of growth in the European economy has negative implications for the community as well as the global market.  If the market continues to fail in Europe, it is likely that the nations will start enacting protectionism measures in order to save their businesses.  If they are failing while other markets are doing better, they will be less competitive on the global market and need to internalize in order to save themselves.  If the European community decreases its global trading, it would have serious consequences in other sectors too, including the United States.  Overall, it is important for the European community to come together and take measures to increase output again.