Belgian economy: A force to reckon with.

Diamonds, lace, chocolates, glass, carpets! These are some of the best known products from Belgium that have a worldwide market. This small European nation has enriched itself by virtue of its high quality and specialized products, and services.

The country enjoys a central position, as it were, in Europe, and has taken full advantage of it. It has developed a world class transport system, and other infrastructural facilities like ports, and harbors that contribute immensely to the country’s economy.

The major contributors to the Belgian economy and its well-being are services, especially transportation, trade, industry, and commerce. Agriculture contributes only 1% to the GDP, while services contribute 75%. While agriculture provides work to 2% of the workforce, services provide 73% of the jobs to the workforce.

The GDP growth rate of the country for this fiscal is projected to be 1%, while industrial growth is expected to be 2%. The unemployment rate is around 7%, and inflation about 5%.

The major exports of Belgium are transportation equipment, diamonds, chemicals, metals, foodstuffs, etc., and the major imports are rough diamonds, pharmaceuticals, chemicals, etc. Among the major industries are engineering, vehicle assembly, processed foods, chemicals, textiles, glass, chocolates, etc. Belgium’s major trading partners are other E.U. members, accounting for 75% of the trade.

The major problem facing Belgium is the high public debt which is anywhere between 75% to 80% of the GDP. In the year 1993, it was said to be 137% of the GDP, hence there is some improvement in this area of economic management. Public debt management is one area where Belgium is found wanting, and needs to overcome.

If Belgium can overcome the public debt problem, it can rightfully become a model economy for other countries, especially those that do not have a natural resources base, and have to depend upon their own talents and capabilities to build up a network of economic activities, that ensure a safe and durable livelihood to its people.

Denmark economy: Smooth sailing.

Denmark is one of the few European countries not affected much by the global crisis, and has registered consistent economic growth over the years.

Of course, the small size of the country, both in geographical terms, as well as population size, means fewer problems and lesser complications. Nevertheless, the Danish Government deserves credit for creating the right climate for economic development, that has made it one of the most favored destinations for foreign investors.

Denmark is a highly developed economy, with a sophisticated industrial base, and exports machinery, instruments, food products, furniture, chemical products, windmills, toys, etc. The country imports raw materials, capital equipment, transport equipment, consumer goods, etc.

The inflation rate of the country is around 1.2%, and the unemployment rate is about 3.7%. The country was recently voted as among the least corrupt countries in the world.

Of course, it is not rosy all the way. There are a few problems, which, if not attended to promptly, may blow up into major issues. For instance, the Danish Banking industry has been capitalized by the Government to the tune of USD 350.00 million. And the country has a negative growth rate of 4.3%.

However, the excellent social safety net of the Government provides adequate support to its citizens. And this safety is also provided at a high cost to its citizens, in the form of income and other taxes.

Presently, the country is a bit isolated in the European Union, as it has not formally joined the Eurozone economies. This is going to have its own impact on the Danish economy, among other things, as being isolated within its own environment may cost dear to the country.

Estonian economy: Oh so slow recovery.

The Baltic nation of Estonia is among the worst hit in the global recession, along with Lithuania, and Latvia, but like Lithuania, is slowly looking up, and moving tentatively towards a recovery in the next year.

According to Statistics Estonia, the national statistics agency, the reason for this cautious optimism is that the rate of decline in the country’s GDP has come down to 3.70% in this year’s second quarter, compared to the 6.10% decrease in the first quarter. The fact that the GDP of the country was falling at a slower pace is reason for hope that the worst may, perhaps, be over, and the economy may be moving north, albeit slowly. However, real growth would appear to be far away.

Estonia has a reasonably good industrial base, and exports apparel, textiles, electronics, furniture, apart from cork and wood. The country imports consumer goods, foodstuffs, fuels, industrial supplies, machinery, etc. But decreasing demand and consumption have led to under-utilization of capacity and increased unemployment to 13.50% in the second quarter of 2009. Last year unemployment was said to be only about 4%.

Estonia, like Lithuania, is in line to adopt the Euro as its currency, and has to keep its budget deficit under 3% of its GDP, as an eligibility condition for the Euro membership. That apart, it has to align its currency rates in conformity with the same requirements.

The current position of the economy according to the national statistics agency is that it is expected to register a negative GDP of (-)10.3% in 2009, and -0.80% in 2010. Though in itself, it is not much to write about, the grimness of the economic situation is such that any little positive development is right now welcome.

Lithuanian economy: Looking up.

The Baltic nation of Lithuania said to be afflicted with the “deepest” recession in the European Union, is looking to break free of it next year, and register a modest rise in the country’s GDP in 2010, though the situation right now is far from happy.

Lithuania has committed itself to adopt the Euro in the coming years, and as such, is obliged to keep its currency exchange rates aligned to these requirements. As a result of this “adoption”, the country’s economy is likely to contract by 4.30%, according to the Prime Minister of Lithuania.

The major issue that country faces now is to “live within one’s means”, as the Central Bank Governor put it. This entails spending cuts, that is a painful exercise. Balancing these cuts between the necessary and the optional and also the unnecessary, is going to be difficult as well as risky for the Government.

Some of the areas of current free spending that are likely to get the chop are old age pensions, and other benefits. The budget deficit is sought to be restricted to around 8% of the GDP, for this year, through these cuts and other such measures. As a matter of fact, spending cuts and reorganization of the tax structure has resulted in a contraction of the economy to the extent of 20.20% in the last quarter of this year.

The delicate economic situation of the country raises the possibility and necessity of external borrowings and all its attendent conditionalities, to keep the economy going. However, officially, Lithuania is not afraid to borrow from external sources if that is the only way out. But it hopes to come out of the recession without more pain in the process.

With practically all its neighbors in economic trouble, Lithuania’s transition from recession to rejuvenation will be keenly watched.

Romanian economy in the grip of an economic Dracula.

Romania may be in the grip of an economic Dracula, that is sucking out the blood from it, and leading to its painful demise, as it were.

According to the country’s Finance Minister, the economy is likely to contract by 8.4% to 8.5% in 2009. This matches up with the forecasts of the IMF that has extended an economic lifeline to the country. However, if things do not improve fast, this lifeline could end up as a noose around Romania’s neck.

Among the problems that Romania is now facing is a possible sovereign bankrupty, for want of funds to run the state and its institutions. Whichever facet of the economy one looks at, reveals a negative factor. Unemployment is rising by the day. Stock values are falling without a check. Investors are bleeding non-stop. Public debt is mounting without an end in sight. Trade deficit is on the rise. The real estate sector is reeling from the effects of the economic mess. Businesses are folding up and even the Banking industry is yelling for help from the Government.

In the scenario obtaining in Romania today, it was inevitable that IMF enter the scene, with all its conditions to bail out the economy, with a generous dose of money. But the fact is that, the major part of this money is going into shoring up the national currency that has been battered in the market, and the financing of the trade deficit. As Romania gets deeper into economic trouble, the IMF gets a tighter hold over its economy and system, enabling it to dictate terms that are likely to cause hardship to common Romanians, without a correspondingly beneficial fallout of these measures, as history has shown.

Only time will tell how this unfolding crisis is going to pan out in Romania, and how it is going to affect the rest of the world.

Bulgarian economy: Tough times ahead.

The Bulgarian economy has taken a serious beating, like the rest of the world, in the current economic crisis, and desperately trying to find its feet again.

Almost all the sectors of the Bulgarian economy are said to have fared poorly in the second quarter of fiscal 2009. The agricultural sector, as well as the industrial sector have recorded contractions, with the industrial sector outperforming the agricultural in negative growth. Exports have been hit badly, though the impact of this on the balance of payments situation is moderated to an extent on account of the fall in the imports on the other hand. However, the effect of reducing imports of essential items is likely to have its own adverse impact.

The overall contraction of the economy in the second quarter of 2009 is said to be around 5%, with consumption down, and joblessness up to record levels, and coupled with declining investment. Essentially, Bulgaria presents the typical picture of a country hit badly by the current recession, with a few local variations.

But the country hopes to come out of this recession, as the world economy is looking up, if one were to go by official pronouncements on this score, by various countries. Of special interest and concern to Bulgaria is the economic situation in France and Germany, two of its largest trading partners. The reported improvement in the economic situation in these two countries presents new opportunities for the Bulgarian economy.

Bulgaria has also initiated a new stimulus package to revive its economy, but the results of the same will take some time to come. That apart, the country is also examining the prospects of IMF funding for its economy, but that is likely to come with tough and unpopular conditionalities. The coming days and weeks are going to be a tough time for the Bulgarian people.

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.