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After Japan and Libya – Portugal to rock Economy

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: Mumbai, March 26, 2011

After the Arab World with winds of revolution and Japan with destruction of tsunami and earthquake, it is now turn for Europe to face the risk of economic turmoil. With the fall of the Portugal Government two days back amidst growing financial debt of the country, the adverse effect is already visible with the value of the Euro falling. There are already anticipations that with its political uncertainty, Portugal might seek a financial rescue, something like a heavy bailout like Greece and Ireland did last year.  In fact the Portuguese borrowing costs has hit new highs on Friday, 25th March after its sovereign ratings were cut following the government collapse. The rates are seen rising further with the European Summit held in Brussels on Thursday and Friday not showing much keen interest in helping their fellow member country.

To make matters worse for Portugal and Europe, legal experts of the country are debating and opining that a caretaker government (after the resignation of Portugal’s Government) does not have the power to request an international bailout if its economic woes deepens. After this statement rocked the European Union, Portugal is trying to showcase that they might not need a Economic Rescue. With Portuguese Prime Minister Jose Socrates having resigned on Wednesday after parliament rejected his government’s latest plan to help Portugal avoid having to seek an international bailout, the conflicting news that a care taker Government can not seek international bailout has raised huge concerns in the European economy. Interestingly Socrates was suggesting that Portugal does not need any rescue fund from the world and can survive with proper financing of the market. However, the country’s parliament especially Pedro Passos Coelho, the leader of Portugal’s opposition Social Democrats party had rejected the idea altogether.

With the Yen already falling and Arab world continuing to get worse, the US dollar value is found rising higher and higher. Although the Stock experts around the world are having a hard time figuring out the severity of the Portuguese unrest to global economy, the news is found to be booster for merchants around the world, who deals with the US or in dollars. It can well be expected that the value of dollar will increase further with Yen and Euro not looking in good shape at all.

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