Nowadays, crisis is the biggest problem for the whole
world. Sometimes, we try new methods and sometimes we try to use old methods
and these events can lead to instability. Because of them, countries had big
regressions in their economies. If we want to give an example, we can tell
Portuguese economy is in this situation because Portuguese people have been facing
their biggest crisis since ever. However, European countries had the big
development index.
European countries lived Golden Age for their
economies in 1945-75. They reached the big economic and social welfare ever attained.
European welfare model and economy politics were together in this period. Unemployment
decreased to its lowest rate, economic growth and total productivity had steady
growth and European citizens had a lot of good rights for their social and
economic issues. European countries cached 4.6% economic growth rate, so annual
gross domestic product per capita increased about 3.6%
The most important factor for this evolution was
Keynes' economic policies. All world countries had big improvement in the development
area through Keynes' economic policies and annual per capita income increased 2%.
Besides, inflation rate was about 4%, unemployment rate was about 3%, but this
happy scenario finished one day.
Regression occurred due to petrol shock, demographic
change, globalization and technological problems in the European countries
economy after 1970s. As a consequence of these events, European countries had a
recession in their welfare and economic growth. They couldn't reach their
potential growth, decreasing unemployment rate, and effectiveness rate of labour.
So, they saw that inflation rate was about 11%, while unemployment rate which was
about 3%, increased to about 10%. Many
European countries witnessed this situation.
Greece, Ireland and some other countries faced this
big crisis because of the big problems they suffered from. If we want to give
an example, instability in housing market is a very good example. Banks opened credit
to people who had not enough budget to get it. Then, these people had properties
but they couldn't pay the money of the loans, here at the banks collapsed. These
banks could be countries' central banks, so countries were influencing this bad
situation.
The European countries governments had expenditures
which were the outcome of the cheap and abundant capital they had access before
and the reforms weren't made according to their target. This is another example
for explaining the crisis. If we want to give another example of these countries,
we can speak of Portugal.
Portuguese were faced with a crisis in 2008. Everything
started collapsing, including, later, one of the biggest Portuguese banks (Banco
Espirito Santo) and the government applied wide belt-tightening policies. Government
imposed restriction in a lot of area. Sometimes, they took right decision, sometimes
they took wrong decision to impose restriction. Portuguese citizens lived hard
times due to those strict policies. They couldn't take advantage of their
health system, education, life pattern and other rights. So, Unemployment rate
increased to 11.6 %. Budget deficit was estimated being 9.1 % in 2010 and
government Portuguese officials appealed
for aid from European Union to get rid of this bad situation. The
European countries governments faced expenditures which were the outcome of the
cheap and abundant capital they benefited from before.
While some European Union members were putting support
behind to help Portuguese (such as France), some other members wanted to have stricter
policies from the Portuguese government. The Portuguese government accepted
conditions established and took € 78.000.000 monetary
assistance in 2011. In this way, while Portuguese were having a 7.2 % budget
deficit. This rate was determined to be 4,4% in 2015. Under the favour of many other
improvements (such as winning European championship in football competition),
specialists are predicting lower rates for budget deficit.
Taking everything into account, crisis does not
influence only a country. It influences the entire world and every country
lived a set of problems in the past. Portuguese lived the same situation but if
government takes required precautions, increase the importance of education, improve
development of sport and other important area, the country will be in a very
good position in future in the world stage.
Nisa İpar Yılmaz
References:
News about Portuguese:
About European Crisis:
About European and Portuguese Economy:
[artigo de opinião produzido no âmbito da unidade
curricular “Economia Portuguesa e Europeia” do 3º ano do curso de Economia (1º
ciclo) da EEG/UMinho]
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