The Global Economic Situation and Uruguay Economic Raises

The global economic situation seems to be slowing down, and experts are pointing out that it is headed for a slump in 2016. Fears have been raised regarding worries of China's slowdown, the world recovery coming to an end and rising financial strains in some economic markets. The first area of concern on the global economic front is that major economies are slowing down such as China, United States, Russia, Argentina, and India. Each economy is experiencing its difficulties from the United States failing monetary policies to china's unpredictable markets; the world economic front is headed to testing times according to most economic experts.

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Another area of concern is the ever lowering oil prices that are affecting the oil producing countries as well as the non-producing countries because the low prices are yet to shake the apathy of consumers in developed economies. The low oil prices have led to losing of employment opportunities in the oil and oil related industries have declined by roughly 8 percent. This challenge has forced global economic experts to state that the fall of oil prices is a double-edged sword to the global economy. The low prices of oil are expected to be here to stay because they are brought by increased supply of oil, as opposed to a price fall due to reduced demand, which in this case would be temporary thus not affecting the global economy. The ability to fall oil prices affecting a country's economy depends largely on whether the nation is an exporter or importer of oil. Uruguay is an importer of crude oil hence its economy is thriving due to the low oil prices as opposed to oil-producing countries such as Saudi Arabia and Russia. Most industries in Uruguay depend on petroleum products to operate. Hence, they have been ripping the benefits of low oil prices.

What do articles suggest about my countries and region's more important economic relationships and vulnerabilities?

The articles suggest that the outlook of the Uruguayan economic raises important questions about how a country should design financial stability agencies and how the implementation of macro-prudential policies can take place throughout the cycle. Risks in the global economic front are many hence a single tool cannot be sufficient to address the various sources of systematic risks. To avoid such risks, a country should come up with institutional frameworks that are aimed at encouraging the effective identification of risks soon as they develop, taking firm and effective actions to curb the emerging risks and making sure that the process of coordinating policies is closely monitored. The whole region of Latin America is vulnerable to financial crises because each economy is focusing on developing and cushioning only its region. International cooperation is important in the matter of global economic front because nations can come up with joint ventures uses to mitigate the effects of a global meltdown.

The Uruguayan economy is vulnerable because it depends on exports to fuel its economy hence an economic crisis in Argentina and Brazil could adversely affect the South American country. Argentina is set to default on its debt, and many experts have pointed out that an economic crisis in Argentina would adversely affect Uruguayan banks that depend on deposits from Argentina.

The articles also point out that the relationship between Argentina and Uruguay as very important, with President Mauricio Macri's first trip outside Argentina being to Uruguay, showing how important the relations between the two countries are. The two countries have been holding bilateral talks to iron out issues that have been affecting trade and business between the two countries. For a long time, the two countries had been trading together until 2002 when Argentine debt crisis almost crippled the Uruguayan banking system. The presidents of the two countries are aiming at returning to normal trading ways, without any fear or tensions.

References

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