Public finance crisis in South Europe and domestic economy

    The instability of global financial markets caused by public finance crisis in South Europe appear to be extended due to the weak economic structure in South Europe, vicious circle of economic recession and Tax environment deterioration caused by tight fiscal policy and the vulnerability of the economic crisis.

    In the second half of the year recovery pace in the world economy is expected to slow down due to the public finance crisis in South Europe.

    OECD analyzes in the case of a tight fiscal adjustment (GDP adjusted tight fis-cal adjustment 1 percent)in the countries of Euro-zone, there is an economic growth slowdown in the OECD and the world economy 0.3 percent, 0.2 percent respec-tively.

    Although the impact of public finance crisis in South Europe is not large, the mid-long term effects of repeated is expected.

    However, the indirect impact of the deteriorating global economy due to the increased volatility of global financial markets and tight fiscal adjustment policies in the developed countries is not large.

    Since the second half of 2010 recovery space of domestic economy is expected to slow down. After 2011 an upward trend of the domestic economy is expected to further weaken due to sound fiscal policy in the developed countries and an exit Strategy.