Economic Crises, Speculative Bubbles, & Corruption

This European Commission report details the economic outlook for Italy, a European Union member-state only behind Greece in gross public debt (% of GDP) at 144.4%. Italy is projected to lower its gross public debt to 140.3% by 2024 with the following economic indicators contributing to Italy’s improvement of economic health and reduction of debt:

• Inflation is expected to decline from 8.7% in 2022 to 2.9% in 2024.
• Unemployment is expected to decline from 8.1% in 2022 to 7.7% in 2024.
• General government balance (% of GDP) is expected to increase from -8.0% in 2022 to -3.7% in 2024.

The EU notes that the phasing out of COVID-19 emergency funds and improvements in the service industry following the lift on lockdown restrictions have aided in Italy’s recovery. While Italy has a significant chunk of public debt that needs to be addressed, the economic rebound seen following the pandemic offers the country a foundation to bolster its economy with the long-term goal of paying off significant portions of its debt.

The European Commission is an official website of the European Union.

European Commission. (2023). Economic forecast for Italy. European Union. https://economy-finance.ec.europa.eu/economic-surveillance-eu-economies/italy/economic-forecast-italy_en

This report details the economic outlook of Eritrea, a nation with a current debt-to-GDP (Gross Domestic Product) ratio of 164.7%. There are major concerns that Eritrea’s grim economic outlook provides the nation little to no opportunities to address it mounting debt with the following being noted as barriers towards addressing Eritrea's economic health:

• Russia and Ukraine account for nearly 100% of Eritrea’s wheat imports and 71% of the country’s oil consumption meaning the Russo-Ukrainian War has dramatically hurt its capacity to import.
• Eritrea is in an ongoing conflict with Ethiopia in its northern region which has further hurt supply chains.
• Eritrea is both one of the most climate-vulnerable countries and one of the least prepared nations to address it with an estimated climate finance gap of $1.202 billion per year from 2020-2030.

The African Development Bank Group suggests implementing economic and financial governance reforms and enabling private finance opportunities to address climate change hazards. It’s worth noting that Eritrea has growing economic ties with China signifying potential growth in private finance opportunities. However, there are concerns that if Eritrea cannot have meaningful economic reforms, then the country will simply incur more debt from a different nation.

The African Development Bank Group is a financial provider to African governments and private companies investing in the regional member countries.

African Development Bank Group. (2023). Eritrea Economic Outlook. African Development Bank Group. https://www.afdb.org/en/countries/east-africa/eritrea/eritrea-economic-outlook#:~:text=Despite%20a%20drop%20in%20the,prices%20for%20energy%20and%20food.

This article details trends in the Irish housing market which saw prices rise 8.9% in the first quarter of 2023.  House prices increased in all but one county across Ireland with Dublin having the most sales out of any county and the most expensive housing market with median home prices of €425,000. This rise occurred in spite of a 3.6% slide in the volume of home sales in the same period. The decline in home sales has been attributed to rising interest rates in the European Central Bank which has in turn hurt the demand for mortgages. Despite higher mortgage rates and shrinking demand, home prices continue to grow, indicating a major concern in the housing supply of Ireland. The country now faces the issue of bolstering its housing supply while dealing with supply chain constraints across Europe following the pandemic. However, if the housing supply isn’t addressed and prices continue to surge, Ireland can lose portions of its population as aspiring homebuyers may have to turn to options outside of their home country.

Ian Curran is a Business reporter with The Irish Times.

Curran, I. (2023). Irish house prices rise 8.9% in first three months of 2023. The Irish Times. https://www.irishtimes.com/business/2023/05/11/house-prices-rise-89-despite-fall-in-number-of-sales/