Essay: Economic Factors Resulting in Financial Crisis

Sample Essay

Italy has been severely affected by the global financial crisis like many other nations. Many promises made by the newly elected government have not been fulfilled due to the deteriorating economic position faced by the country. Italy has a massive public debt that is almost a hundred and five percent of the Gross Domestic Product. The GDP in itself has declined by around 0.6 percent in 2008. The forecast prepared by the Economist is that GDP will fall further in the following years.

The fiscal budget deficit which was already almost 3 percent of the Gross Domestic Product in 2008 is expected to increase to over 4 percent in the next year or two. The ratio of Public Debt to the Gross Domestic Product which already was at an astronomical high in the year ended 2008 at around a hundred and five percent is expected to rise further to more than a hundred and ten percent in the next year or two. The deficits might be much higher if tax cuts which were originally promised during the election campaign are implemented (Intelligence Unit, 2009).

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