Greece and Spain “in Depression, Not Recession”: Stiglitz
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Nobel Prize laureate Joseph Stiglitz has described the Spanish and Greek economies as being in a state of depression, an impact which he says was brought about by Europe’s austerity-driven approach to the region’s debt crisis.
Speaking at a conference organized by the Organisation of Economic Cooperation and Development, Stiglitz expressed pessimism for the eurozone crisis, saying he sees “significant risk of continuing turmoil.”
Nobel Prize laureate Joseph Stiglitz has described the Spanish and Greek economies as being in a state of depression, an impact which he says was brought about by Europe’s austerity-driven approach to the region’s debt crisis.
Speaking at a conference organized by the Organisation of Economic Cooperation and Development, Stiglitz expressed pessimism for the eurozone crisis, saying he sees “significant risk of continuing turmoil.”
He said:
[quote] “Spain and Greece are in depression, not recession. That impact was brought about by austerity. Austerity is bringing Europe down and diminishes chances of making things work — it is the wrong measure. [/quote]
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Unemployment in Greece hit a record hit of 25.1 percent in July, with more than 1,000 jobs lost every day over the past year, according to the latest official data. The Greek economy has also shrunk by about a quarter since the start of its recession in 2008 and is expected to continue its recessionary path next year.
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In Spain, the jobless rate is 24.6 percent with the government introducing new spending curbs as it seeks to fend off another bailout that would bring more foreign supervision of the Spanish budget.
Stiglitz also cautioned that “things are unravelling for the banking system in Spain,” following the bursting of the country’s property bubble. Last month, an independent audit calculated that Spain’s banks will need an injection of 59.3 billion euros ($77.6 billion) to survive a serious downturn, or about 6 percent of Spanish GDP.
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Painting a bleak outlook for the global economy, Stiglitz also said that the International Monetary Fund was “a little too optimistic” in its forecast last week that the eurozone economy would shrink by 0.4 percent this year before recovering by 0.2 percent in 2013.
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