Despite the many positive developments, there is the problem of rising unemployment
and weak growth among some of the countries in the European Union, which made it
difficult for them to meet the fiscal deficit targets set for the monetary union.
Unemployment in France, Germany, and Italy are at record levels. The growing imbalance
between those employed and the inactive population will raise budgetary expenditures
and require further increases in the already heavy tax burdens.
There are some downside risks of a significant correction in
the US stocks market should earnings expectations be downgraded or interest rates
increased markedly. A large market correction in the United States could contribute
to a cyclical downturn and dampen the prospects for international economic growth.
