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Unit 13 The Foreign Economic Hot Issues Text A Euro-zone Debt Crisis “PIIGS” was mainly involved in Euro-zone debt crisis. “PIIGS” is Portugal, Ireland, Italy, Greece and Spain. The initial letters of those five countries combined are called “PIIGS”. 8th, December,2009, one of the three main rating agencies in the world, Fitch announced that it would cut the Greece’s sovereign rating from “A-”to “BBB+” and downgrade its outlook to negative. This was the first time for Greece’s sovereign credit rating falling under “A” in the past 10 years. Then the Euro-zone debt crisis was started. May 22ed, 2010, the Spanish Central Bank announced that it took over small-sized savings bank CajaSur and the markets worried that sovereign debt would spread from public domain to folk field. This action was regarded as the further worsening of Spanish Crisis Debt. The euro-zone crisis reached a critical stage when Italy joined the seven percent club, the group of euro-zone countries whose borrowing costs have gone above 7% and stayed there. Its public debts are close to 120% of GDP. Only Greece has a greater burden. Ireland’s is lower but it has a large budget deficit so this is adding to its debt at a rapid pace. So is Britain but it has benefited from being a non-euro haven and can still borrow very cheaply. Italy’s situation is not yet critical because the government does not have to refinance all its debts quickly at punishing interest rates. The average maturity of its public bonds is around seven years. Only in Austria and Britain is longer. GDP grew in most countries in the first half of 2011, though there were marked differences in performance. Germany was sprightly. So were the countries around with which it trades most heavily. By contrast GDP in Greece and Portugal has crashed under the weight of austerity. More recently, the crisis has sapped the strength of even the so-called “core” euro-zone countries. The strains of the euro area’s sovereign-debt crisis make a recessio