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A group of leading, global economists including two advisers to the German government have sounded a dire warning for debt-stricken Europe.
“Europe is sleepwalking toward a disaster of incalculable proportions… The sense of a never-ending crisis, with one domino falling after another, must be reversed,” a new report issued by the Institute for New Economic Thinking (INET), stated.
Policymakers must deal with legacy costs of the “initially flawed design” of the euro zone, as well as fixing the structure of the bloc itself, to have any chance of getting out of the current mess, the report said.
Meanwhile, evidence the crisis is impacting countries all around the world is beginnig to reveal itself.
The European Bank for Reconstruction and Development (EBRD) slashed its 2012 growth forecast for Russia by 1.1 % to 3.1 %. The crisis was reaching Russia via two main channels: lower commodity prices and a general reduction in risk appetite.
“The negative spillovers are reaching east, and to Russia in particular through two main channels: lower commodity prices and a general reduction in risk appetite,” said Piroska Nagy, the EBRD’s director for country strategy and policy.
Thailand is also feeling the euro crisis pinch. Exports to 15 European nations dropped by 16.1 %, while export to the US increased by five per cent.
The country’s commerce ministry said the euro crisis had cooled export-oriented manufacturing in several countries which ordered raw materials from Thailand, including Japan, South Asia, South Korea, Taiwan and Russia.
