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Iran and Italy - macro economics assignment - Essay Example

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Italy and Iran have both been facing difficult economic conditions in the period 2011 to 2015.The deteriorated economic performance was as a result of different contributing factors. While some of the factors that contributed to the downward performance of the two countries are…
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Download file to see previous pages ay before it was hit by recession Italy was already experiencing poor economic performance of an average real GDP growth of only 1% per annum (Morsy and Sgherri, 2010, p.3). This was the period between 2001 and 2007. This growth rate was almost half the euro area growth rate. After the onset of recession in 2008, Italy faced a 7% decline in the GDP.
In the first quarter of 2010 the economy started to recover from the poor performance. The recovery was halted in 2011 when the country reentered recession for the second time. The GDP fell by 0.2 % by the second quarter of 201l. By the end of the last quarter the GDP had declined further by 7%. This condition persisted in the first quarter of 2012 and then there was a little improvement although the GDP still remained negative.
After the long contraction of the economic performance the GDP started improving in 2014 but it was still negative. The GDP is expected to become positive in the current year. Although a positive GDP is being anticipated the level expected will still below the euro average GDP.
Iran on the other hand started facing a contraction in its business cycle in 2011. At the beginning of 2011, the country was facing a constant GDP growth rate of around 6% to 8% per annum. This increasing GDP was halted in mid 2011 when the GDP faced a significant drop. The GDP growth rate fell below 5% and the downward trend continued until July 2012. At this time the GDP had fallen greatly and was on the negative side. The growth rate at mid- year 2012 was estimated to be -10%. This was the lowest level achieved during the period. After the 2012 drop in GDP it started increasing at a constant rate until early 2013 a downward movement. The drop was short term and by mid 2013 the GDP growth rate had started rising again. By mid-year 2014 the GDP growth rate was positive again at a level of around 5%.
One of the main reasons for the downward economic growth in Italy was the high public debt. The shrinking GDP in the ...Download file to see next pagesRead More
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