Italy crisis will be too much for Europe, Latvia finance minister warns

Still, fears loom over potential contagion, which refers to the spread of market disturbances coming from one region to others as well as is usually normally associated which has a financial meltdown. The spread of an Italian financial as well as debt crisis to different countries could cripple their ability to repay government debt without third-party help.

The closest example of This particular could be Greece, whose debt crisis over the past several years brought chaos onto Europe as well as still remains a major problem for the continent today, although European safeguards largely prevented contagion.

“Several big countries are already demonstrating they are not inside game,” the Latvian minister told CNBC on Thursday. She described This particular as a burden politically as well as emotionally as well as financially for the rest of the euro community.

“We see how difficult the item is usually for Greece to take the common agreements on their rescue program, to pursuing the necessary reforms. I’m not so sure of which the different member states could be eager today to invest more in some of the countries of which probably have not obeyed the strict rules of the game.”

Asked if Italy’s crisis could spell the end of the euro, Reizniece-Ozola replied, “I wouldn’t think so still, because the rest of the countries, in general, we do appreciate having the common currency.” however, she added, the item could still “trigger” a move in of which direction.

Latvia adopted the shared European currency in 2014 as well as in 2017 saw robust growth of 4.5 percent, aided by EU funds like the European Social Fund, as well as European Regional Development Fund as well as the Cohesion Fund. The Baltic country of just under 2 million joined the OECD as its 35th member state in 2016 as well as has been praised for its fiscal as well as structural reforms.

While the market panic seems to corroborate Reizniece-Ozola’s views earlier inside week, many analysts see the risk of contagion as smaller, as well as the risk of a euro departure even smaller. Former IMF Chief Economist Olivier Blanchard told CNBC This particular week of which he believed Europe could be OK, however he was “very worried about Italy.”

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