According to the World Economic Forum competitive score in2010-2011, five countries, “Greece, Italy, Portugal, Spain, andIreland” were ranked poorly, compare to their European Unioncounterparts. Thus, they were referred to as ‘peripheraleconomies’. Greece was ranked 83rd in thecompetitiveness index, which highlighted the economic challenges ithas faced in the recent past. Despite the economic boom that wasexperienced in the early 2000s, characterized by increased consumerspending, it was hit hard by the global financial crisis. This led toa decline in the shipping business and reduced tourist traffics. Thecountry was forced to accept the bailout package of 150 billiondollars in exchange for economic monitoring from EC, IMF, and ECB.
Italy was rated as ‘less at risk’, despite being 48thin the Global Competitive Index rankings. However, to comply with theEuro Zone standards, reducing the budget deficits was necessary.Additionally, the scandals that faced the country’s prime ministerimpacted negatively on public confidence. Portugal, which was rankedat position 46, was the poorest nation in Western Europe. During thefinancial crisis, it had a budget deficit of 9.3 percent. Thisnecessitated a cut in military and infrastructure spending.
In Spain, at 42nd in the rankings, the high rate ofunemployment was a major concern. Unemployment benefits encouragedjoblessness resulting in high government expenditure through socialwelfare. Labor laws reforms were, therefore, essential. Additionally,the economy was negatively affected by the collapse of the realestate industry, which impacted on saving banks. Similarly, the Bankof Spain had to save the financial institutions from the crisis.Ireland, the Celtic Tiger, enjoyed a wave of rapid economic growth inthe 1990s, due to the technology boom. Despite this, it was adverselyaffected by the challenges that faced the real estate markets in the2000s. It was rated 29th in the WEF competitiveness index.
Will the euro survive? Case 3-1.