Europe’s economy in a fragile state

The fragile economy of Europe is likely to be affected by the never ending conflicts in Ukraine and Iraq. While, the economies of Britain and the US grow strongly, output in the euro bloc has come to a standstill. Germany is losing its hold and Italy is plagued by recession.

The global markets have been affected by the sanctions fight between Russia and the West as well as the US air strikes to stop Islamist militants in Iraq. The sanctions war between Moscow and the European Union and the growing concern over Russia’s invasion of eastern Ukraine have slowed down the economic growth.

Moscow supplies nearly a third of the European Union’s gas needs, Europe has strong trade ties with Russia. Thus, the increasing political conflicts in Ukraine and Iraq could have a major impact on the already weak economy of Europe.

Europe’s sluggish economy may help the US come to the forefront. Investors will test the strength of US rebound, while others are in search of reassurance that the recovery will stick even when central banks make borrowing expensive.

In Britain, unemployment rates may decline but earnings are expected to be lower than the previous year. The situation is similar in the United States. The cost of living is much higher than wage growth.Thus, to trust the recovery of the economies of the US and UK, wages need to rise in line with credit.

China’s economy has witnessed improved growth in the second quarter as the government has taken steps to improve construction of railways and public housing. However, the declining property prices and the high local government debts are slowing down the economy. The government will have to bring in deeper reforms to help push the economy forward. 

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