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The Eurozone crisis by Arpan Bhowmick


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Eurozone Crisis and its impact on India

Published in: Economy & Finance, Travel
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The Eurozone crisis by Arpan Bhowmick

  1. 1. THE EUROZONE CRISIS Arpan Bhowmick – 13DM068 Rohan Bhowmick – 13DM074
  2. 2. TOPICS TO BE DISCUSSED  Eurozone  Eurozone crisis  How the crisis started  Current situation  Who’s fault  Impact on India
  3. 3. EUROZONE  Economic and monetary union (EMU) of 17 European Union (EU) member states  Adopted ‘Euro’ as their sole trading currency  Consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Ge rmany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.
  4. 4. EUROZONE CRISIS  An ongoing crisis that has been affecting the countries of the Eurozone since late 2009.  It is a combined Government debt crisis, a banking crisis and a growth and competitiveness crisis.  Started in October, 2009 in Greece  Weaker economies: Portugal, Italy, Ireland, Greece, Spain (PIIGS)
  5. 5. HOW THE CRISIS STARTED  EU comprised of strong economies (Germany, France) & weak economies (Greece, Portugal)  Weaker economies of EU (PIIGS) overspent using borrowed money  Unable to pay back their debt  Spain - ended up with high deficits because it couldn't collect enough tax revenue to cover its expenses
  6. 6.  Greece: - borrowed beyond its means - lots of overspending - little economic production to make up the difference - creative bookkeeping to prevent euro zone authorities from realizing the true extent of the situation  Italy and Portugal - huge debt to GDP ratios, high unemployment and weakened economy
  7. 7. CURRENT SITUATION  Investors reluctant to buy bonds from European countries, since many are in huge debts  EU may break up  Certain countries may pull out of EU  Unemployment in Spain is at 25%  Hampered international trade
  8. 8. WHOSE FAULT??  Countries borrowed too much, taking advantage of the low interest rates available to all euro member nations  Euro as a single currency cant meet the needs of 17 different economies
  9. 9. IMPACT ON INDIA  Capital flows into the economy and exports  FII investment pattern marked with high volatility  Merchandise exports to the region declined by 1%  Decline in tourist visits from Europe  Weak Euro => Strong USD => Weak INR  IT/Outsourcing companies facing losses
  10. 10. THANK YOU