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The eurozone's 18-month double-dip recession has finally come to an end, with the bloc...

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tiemau | (Level 1) Honors

Posted August 16, 2013 at 7:14 PM via web

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The eurozone's 18-month double-dip recession has finally come to an end, with the bloc posting 0.3 percent growth in the second quarter of 2013. But analysts say optimism should be tame, as growth is patchy and the labor market is still a long way from recovery.  How will this affect the economies of developing countries?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted August 16, 2013 at 9:02 PM (Answer #1)

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While this situation may help the economies of developing countries in the long term, it will hurt them in the short term.  The reason for this is that these countries’ economies often depend on trade with the Eurozone and other rich areas of the world.

It is possible that this slow growth in Europe will help developing countries in the long term.  It might force them to try to produce for domestic markets rather than for export.  This could help to build their economy in the long run.

In the short run, however, the developing countries will be hurt to some degree.  These countries depend on trade with the rich world for much of their economic activity.  If the Eurozone is growing very slowly, it will not be likely to demand as many imported goods.  People in the Eurozone will be less likely to feel comfortable buying a lot of goods because they will fear that the growth will not last.

Because of this, the demand for goods produced in the developing world will drop.  This will, of course, hurt the economies of developing countries.

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