The whole world seems to recover from the 2009-2010 crisis and the development of different types of manufacturing and other spheres should improve. However, looking at the announcements from the Euro zone, the economical situation there is much worse than it was expected. The Euro zone has always been the example of stability and growth.
The economy of its region has never appeared in too complicated situation and difficulties. Having created the united zone and the same currency, the Euro zone has been developing and its economy has been flourishing. However, even such stable and constantly developing country could not hide from the crisis. David Jolly in the article “Unemployment and Inflation Rise in Euro Zone” published on March 1, 2012, dwells upon the main problems which has raised in the Euro Zone.
The author stresses on the level of unemployment and quotes some specialists who try to predict the level of the problem and the particular measures which may be taken to improve the situation as soon as possible. Many specialists predict that the problems are going to last for some period of time and the countries which are included in the Euro zone should try hard to remove the problem and to return to the pre-crisis activities.
Looking at the economics of European zone, it is easy to notice the increased unemployment rates. Different source announce that the unemployment rate has increased since the end of 2011 and it continues to rise in 2012. 17 countries in Euro zone report about rapid increase of the unemployment (Figure 1).
The official sources report that there has never been such critical situation from the day of the united currency implementation in 1999 (Figure 2). The unemployment in Euro zone has a lot of consequences which may lead to unpredicted situations and may result in greater disasters for other countries.
Considering the situation from aside, it is possible to state that the banks and the governments of the countries which have appeared under the critical consequences try to do all possible to reduce the number of unemployment. However, the situation becomes more and more complicated. If to check the situation from the side of the number of those who are involves in the manufacturing processes, it is possible to conclude that the increased rate of unemployment has reduced the manufacturing volumes.
Therefore, each company involved in the manufacturing processes is to reduce the pace which does not support the recovering from the critical situation. Therefore, the manufacturing activity is reduced to minimum and if nothing is going to happen, the reduction of the manufacturing activity may reach the critical level.
Additionally, there are many other factors which do not help the economy of the country to raise. Two main factors, the increase of the unemployment and the reduction of the manufacturing activity, lead to the predicted result. People begin spend less money as they are unable to allow the expenses they could make in the times with the normally functioning economy.
The regime of economy people have to follow leads to the fact that hey spend less money, of course, and it constrains the economy of the Euro zone. Therefore, it seems that there is no way out as one of the problems raises another one which does not give an opportunity for the first one to rehabilitate and continue its normal functioning.
Of course, the banks and financial establishments do not stay away from the problem and do all possible to improve the situation. The loan for three months of a sum of about $1.3 trillion is great money, however some specialists consider that this loan will help the Euro zone to improve its situation and recover from crisis.
However, some skeptics correctly announce that the intensive money supply may increase the inflation. It should be stated that he unemployment in the Euro zone is supported with inflation which creates additional difficulties on the way to the stabilization of the economics in the region. Therefore, one of the fears of some economists remains the rapid grows of money supply which may cause additional difficulties on the way to the economy recovery.
Of course, no one says that the problem the Euro zone suffers now from are too crucial to be solved. The situation is going to improve if much attempt is directed at the problem. However, there is no need to wait for too fast results as it is impossible to correct the problems which are impacted by the world issues. The problems in the economical situation in the Euro zone are caused by many factors and only the application to those factors may help to improve the situation.
Among some of the most complicated and unregulated factors which impact negatively the economic situation in the Euro zone remain the increased and rising prices on energy. These factors cannot be effected, therefore, it is important to make all possible to adjust to the situation and to create additional factors which may help the economy of the European zone to improve its positions.
Figure 1: Unemployment rates in January 2012, seasonally adjusted (Jolly n.p.)
Figure 2: Euro area and EU27 unemployed (in millions)
EA 17: Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland (Jolly n.p.).
EA 27: Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom (Jolly n.p.).
Jolly, David. “Unemployment and Inflation Rise in Euro Zone.” 1 March 2012. Web. 30 Apr. 2012. http://www.nytimes.com/2012/03/02/business/global/unemployment-and-inflation-rise-in-euro-zone.html