Armenian economy: Getting worse.

One of the ex-Soviet bloc countries with a population of just 3.20 million, is heading for a major economic slowdown in 2009-2010. According to the International Monetary Fund, the Armenian economy is expected to shrink by 15% in 2009.

Construction, the country’s largest industry and major constituent of the economy, is down in the dumps, having recorded a fall of 53%. Overall industrial output is down 12%. Unemployment is increasing and stands at around 7.50%. Inflation is however, coming down compared to previous years and is around 4.40%. After registering a average growth of 13.50% in the last three years, the country’s GDP is heading South now.

Among the country’s major industries are diamond processing, metals, etc. It exports pig iron, copper, non ferrous metals, foodstuffs, etc., and imports natural gas, petroleum, tobacco products, etc.

Armenia seems to be hit badly by several misfortunes at a time. Russia, on who the country depends a lot for remittances and cheap oil and gas, has also been hit by the global crisis, and this has affected Armenia in many ways. The country had to approach the IMF for an economic package to which the Institution has agreed.

Economic troubles have also forced the country to swallow its historical bitterness with Turkey and take a decision to re-open its borders with its former rulers. The opening of the Turkish-Armenian border is expected to ease the pressure on the Armenian economy, by promoting trade and other relations. It will also reduce the logistical cost of exporting Armenian products, thus making its products more competitive in the international markets. There is, however, opposition to the re-opening of the border, and this may result in political instability in future.

Latvia economy: Cutting costs to survive.

Living within one’s means is a sound economic principle that few individuals as well as countries follow, as a matter of rule. Latvia, it would appear, is trying to implement this principle, to put its economy back into shape.

One of the East European countries, that has, for long, lived under the shadow of Big Brother, the earstwhile Soviet Union, is slowly setting its economy on the right track after being hit by the economic crisis.

Among the major industries of Latvia are transport equipment and systems, agricultural machinery, fertilizers, processed foods, etc. Latvia exports textiles, foodstuffs, wood products, etc., and imports fuels, chemicals, etc.

Presently, the country is engaged in the exercise of balancing its budget to strike a balance between what is necessary and that which can be avoided. Not an easy task given the competing priorities, if not other considerations.

For example, there are differences between the Prime Minister of the country and his Finance Minister on the scope and nature of the budget cuts. Whereas the Prime Minister believes that budget cuts in the region of LVL 275.00 million would be sufficient in 2010, the Finance Minister is of the opinion that the cuts should be in the region of LVL 500.00 million.

However, there is consensus about the areas that should be spared budget cuts, viz, health care, Government debt repayments, and contribution to the Euro budget. The areas of contention, among others, are defense, social spending, environment, culture and sports, public administration, etc.

The problem, it would appear, is that the country has clubbed contrasting areas of concern like defense and social spending together, that is apparently causing a lot of confusion, in determining the size of cuts in the respective budgets. Perhaps, the country should re-work its priorities.

Czechoslovakia: Falling exports, failing economy.

Among the faster growing economies in Europe, this ex-Soviet bloc member is heavily dependent on exports to keep its economy ticking. According to official estimates, 60% of the country’s GDP is contributed by exports.

Western Europe is the major market for Czech exports. Glass products, beers, trams, cars, machinery, wooden toys, etc., are among the major exports that fill the Czech coffers. Among the major import items are mineral fuels, lubricants, oil, gas, etc. Having enjoyed a steady growth with the help of a robust export market, Czechoslovakia is now experiencing a downturn on account of the all round recession, leading to falling demand for its products in spite of their high quality.

Falling demand for Czech products overseas has led to increased unemployment, that now stands at around 8.50%. Worse is in store on this count in 2011. Not only are employment opportunities going to be scarce, even the wages are expected to fall in real terms. The economy is expected to grow 2.50% in 2010 and about 3.40% in 2011. Inflation though, is expected to be under control posing little problem. These are some of the findings of the country’s Finance Ministry survey conducted recently.

This Central European country that was earlier an important member of the Soviet bloc, is now an important member of the European Union, contributing handsomely to the overall economic development in the region. With Europe slowly getting out of the recession, with France and Germany leading the way, the Czech economy is expected to look up and start performing once again. However, it is anyone’s guess as to when exactly there is going to be real growth as against just a fall in the negative numbers.

Bahamas economy hit by the downturn.

The Bahamas Islands, still among the wealthiest in the Caribbean, however, is struggling to keep its economy above the water, in the face of the global economic crisis.

The two areas that are badly hit by the recession namely, tourism, and financial services, are the two most important industries of the Bahamas. America, that is the epicenter of the global economic crisis is contributing lesser and lesser tourist dollars to the Bahamas every month, and offshore banking has become a dirty word practically, because of the unhealthy and unethical practices that have become the rule in this business.

As a result, the Bahamas is experiencing a mighty squeeze on its revenues. Fiscal 209 is going to see a negative growth of -1.70% in GDP as reported officially. Unemployment is running at 14%, and inflation is inching towards the 3% mark. With problems mounting by the month, the otherwise idyllic setting of the Islands resents a sombre mood today.

The financial services industry that is the second major revenue contributor after tourism, has not been able to absorb the hits emanating from the U.S. Banking crisis, and this has combined with the slowdown in tourism to deal a below-the-belt blow to the economy.

The Bahamas Islands also exports certain minerals, chemicals, fruits, vegetables, etc., and imports include foodstuffs, machinery, transport equipment, etc. Among the major manufacturing industries are plastics, pharma, liquor, etc.

Even though the present Government has adopted investor-friendly policies, it may not have the desired effect very soon. Unless the U.S. recovers from the recession, and its economy moves forward, the Bahamas Islands may not have much of a chance to wriggle out of the present situation.

Polish economy: Out of the woods

The ex-communist state of Poland, that was once a leading member of the Soviet bloc countries, has made a fairly successful transition to a market oriented economy, in the European Union, and now boasts of being the only state in the EU, with a positive second quarter result, compared to the previous year. No mean achievement for a nation that was once hostage to the whims of the Communist Kremlin.

Poland is expected to record a second quarter growth of 1.10% in 2009. This growth is said to be the result of rising domestic demand and the flexible policies of the Government, that has risen to the challenge and done some good work in the areas of fiscal and monetary management. It has also created a favorable environment for investment, though privatization is lagging. However, the exports sector is doing very well indeed.

Poland has, of course, its share of problems, though in the current upbeat economic mood, these problems may not get highlighted. For example, it has problems with a large public sector that is not very efficient, high public spending, though it has resisted the temptation to increase spending even more to counter the economic crisis.

The most important issue, perhaps, for Poland right now is rising unemployment that reportedly stands at nearly 11%. Adding to this problem is the economic condition in Iceland, that employs a good number of Poles. On balance it would appear that Poland is right now doing much better than many of its European counterparts.

However, the Polish Government is not going overboard with its successes. It is keeping its eyes and ears to the ground to deal with any unexpected developments in the economic sphere. According to the Poish Finance Minister, the positive second quarter results are “not an end of the crisis, is not the endo of the problems that Poland is going to struggle with.”

Iceland economy: Melting faster than ice.

A country without an economy? Iceland may very well be inching towards such an improbable situation. The true meaning of an economic meltdown can be seen in Iceland, where the global economic crisis has dealt a body blow to the country’s economy. Unless the Icelandic Government does something fast, it may be too late to salvage the situation.

But what that ’something’ may be is the million dollar question. No one seems to have an idea about it. While the failure of Banks in the United States set the stage for the worst economic crisis in decades, being a much larger economy in size, and also well diversified, America could still manage to stay afloat. Whereas, the failure of the Banking industry in Iceland has had a much more devastating effect, that has left the country literally bankrupt.

The major reasons for Iceland’s economic woes are the failure of the Banking system and the lack of virtually any reserves with the country’s Central Bank. Unemployment is going up by the day even leading to street demonstrations. Businesses are going bust everyday, and putting up their hands and feet in defeat. Defaults in home loan and other mortgages are resulting in a large number of non performing loans.

Added to this is the slump in consumer confidence and consequently, spending. With interest rates as high as 12%, and public confidence down to nil, the situation building up in Iceland is truly frightening, not only economically, but also socially.

The country’s Central Bank, exposed badly in the current crisis for its non-performance in critical areas of its functioning, has predicted a contraction in the economy of 9% in fiscal 2009. The country’s attempts to raise money from the IMF have attracted pretty tough conditionalities. Coupled with this is the hostile reaction of certain European countries, especially Britian to Iceland attempts to salvage the situation through co-operation from other European and International benefactors.

Iceland has had to suffer the ignominy of its firms, including a Bank being targetted under the anti-terror laws, and have their assets forzen.How Iceland and its citizens, used as they are, to extreme natural climatic phenomena, are going to face up to this man made disaster remains to be seen.

Irish economy: End of the tunnel in sight.

The Irish have gone through some of the worst economic times in their troubled history, in recent years. With their sovereign rating cut to AA by the major rating agencies, the country is truly in a precarious condition, economically speaking.

While France and Germany in Europe have reported encouraging results pointing to a possible move out of recession, it is the United States and its economy that have a bigger role to play in a global recovery. And the Irish economy is dependant, like other modern economies, on a global recovery to see the end of recession.

Ireland has taken several steps to stimulate its economy, and provided incentives to businesses to grow and increase produ ction and output. One of the major steps taken by Ireland is to increase the pace of its exports. It expects the positive developments in the export sector would have a cascading good effect on the other sectors, leading to an overall positive environment. B

However, this again depends on the state of economy in those countries that Ireland hopes to attract for its products and services. By the time the overall global eocnomic situation improves, and brings in its wake a more positive outlook for economies that are export driven, countries like Ireland will have to wait a little longer to begin feeling the relief.

Ireland has all the regulation problems of a country in recession, with high unemployment, low demand, poor state of public finances, tax issues, etc. Everything seems to be put on the table for review and restructuring, that is aimed at just getting out of the recession.

Among the more radical measures suggested by the Commission on Taxation of Ireland is to restructure the nation’s tax regime, that is aimed at making the country a low tax economy.

The next couple of months are crucial for Ireland, as for the rest of the world in the context of the global recession.

Greece: In for some serious economic trouble.

Greece, which evokes images of learning and wisdom, could itself do with some of it in the sphere of economic management and development, right now.

The debt-ridden country has taken a big hit in the economic crisis, in spite of the absence of toxic assets in the Banking sector, unlike some of its Western cousins. While some of its Western counterparts are slowly emerging out of the recession, Greece is seen noisily slipping into it, what with political uncertainty expected to follow an inconclusive snap parliamentary poll in October this year.

Greece has been delaying economic reforms for a long time, in order to avoid a public backlash. However, no sooner did it propose austerity measures, were there violent street protests against the same. The October polls are likely to bring in even more uncertainty to Greece, both politically, as well as, economically.

That the Greek economy is in trouble is an understatement. With its largest industries and major revenue earners namely, tourism and shipping in bad shape, the economy has taken a dive in negative waters. Other industries like food processing, tobacco processing, mining, and petroleum are also not said to be in the pink of their health.

Markets are jittery over the prevailing situation. Sovereign bond ratings have been downgraded by the rating agencies. With a sky-high national debt of nearly 104% of GDP, other Euro zone members are concerned at the impact of bailing out Greece, on their own economies.

Greece has long been a weak link in the Euro zone chain of economies, and what happens to it or in it, is of utmost importance to the other members.

New Zealand economy still in choppy waters.

New Zealand has a long way to go before it really comes out of recession. This is the message conveyed recently on a radio program by the Governor of the Reserve Bank of New Zealand.

It was a frank admission of the ground realities that are not going to improve any soon. Given the fact that New Zealand is closely associated with the other recession-ridden countries, especially the United States, there is little hope of it riding out of the recessionary cycle soon.

Among the major concerns for the New Zealand Government are the high exchange rates that the Government is trying to unsuccessfully bring down. On the other hand, interest rates are at a historic low at 2.50%, and still not resulting in bringing the much awaited turnaround of the economy. The current recession is said to be the worst such in the last three decades.

On the brighter side there are a few positives though. Consumer confidence is slowly going up. The housing market is looking up. The fiscal stimulus did have a positive impact on the economy. But the fact is that the positives and pluses are nowhere near the level required to revive the economy. And unemployment rates at around 6% are the highest in nearly a decade.

The New Zealand Government is adopting a multi-pronged strategy to deal with the dire situation, with not a very high level of success. Apart from tinkering with the interest rates, the exchange rates, and the stimulus program, it is also planning to sell bonds worth USD 31.00 billion to infuse liquidity into the system.

The next couple of months appear to be crucial to the New Zealand economy, as the results of its efforts would become apparent then.

Thai economy enters recovery phase.

The popular tourist destination of Thailand has suffered more than one knock to its economy in the recent past. The tsunami, followed by the global economic crisis, and now the H1N1 flu, affecting its economic mainstay, namely, tourism.

Now it appears that Thailand is slowly emerging out of the worst phase of the economic crisis, as figures released by the National Economic and Social Development Board would indicate. As is the case with other countries, supposedly out of recession, the major criterion applied to Thailand is also the fact of a slower contraction of its GDP in the last quarter. It is expected to contract only 3% at the end of the fiscal 2009.

Some of the factors that have helped the Thai economy grow are the improved economic conditions in other countries resulting in an upswing in tourist arrivals to a modest level. Other factors include increased consumer spending and confidence.

The Government stimulus program has also helped the economic revival. The new stimulus plan running into Thai Baht 1.40 trillion is expected to lay the ground for rapid economic development during the plan period of 2010 to 2012. This stimulus package is part of the “stronger Thai 2012 project” initiated by the Government to drive the Thai economy into the next century .

However, as the Thai economy is heavily dependent on tourism and exports, the upswing in the economic fortunes of other countries that contribute to Thailand’s economy is a necessity. Any delay in the improvement of recovery in these countries could set back Thailand’s economic plans correspondingly.

Overall, there are fairly strong signals of the Thai economy moving towards recovery. The longer this phase lasts, the stronger the Thai economy is likely to emerge. The question is whether this phase would last long enough for the Thai economy to get going once again.

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