Multiple nations have debt issues that must be resolved. A large European bank recently claimed that an international debt crisis could be on the horizon. Italy is a nation with an enormous debt problem. In just the past few years, the country has taken on massive levels of new debt.
The economy of Italy is contracting. Millions of people have moved out of Italy in just the past decade. Young people leave the country in search of better career opportunities in other areas. If the trend continues, Italy may have to default on some of its debt.
Changes to Monetary Policy
In the last recession, several nations were on the brink of financial collapse. Central bankers decide to decrease interest rates to boost economic growth. Interest rates have started to increase again due to global growth. One issue with rising interest rates is that borrowing money becomes more expensive. Nations that are borrowing too much money every year will only fall farther behind.
Many banking organizations believe that some government leaders will have to take drastic action to avoid a financial collapse. In countries with major debt problems, taxes may have to increase to pay the interest on the loans. Higher taxes will only increase the number of people moving out of countries like Italy.
Although many nations are experiencing economic growth, there are places around the world with stagnant growth. In many developed countries, the birth rates are falling. The population of Japan is expected to contract by millions of people over the next few decades. Population growth is a central aspect of economic expansion.
Government corruption is also a significant challenge in Italy. Although the government of Italy allows people to vote, the average person feels like their vote does not count. Government corruption is difficult to solve without a massive upheaval in the political system.