In the ever deepening and increasingly global economic crisis that continues to envelop us, it can be difficult to identify which countries are suffering the most pronounced financial consequences. After all, even relatively prosperous nations such as the United States and Canada are experiencing diminishing growth, as the former's economy created just 80,000 new jobs during the month of June.

The crisis in the eurozone is wreaking further havoc on the global economy, and the International Monetary Fund (IMF) revealed this week that growth around the world is expected to be weaker than the 3.5% that was predicted during the first financial quarter. With this is in mind, numerous countries throughout the world face a significant challenge to rebuild their economies and achieve financial solvency.

SEE: 5 Economic Reports That Affect The Euro

Spain: Why Speculating to Accumulate Is Not Always a Way Forward
This is especially true for nations that have been hit hardest by the global economic downturn, with Spain in particular experiencing unenviable financial hardship. Earlier this summer, the yield on the countries benchmark 10-year bonds soared to a record 6.96% during intraday trading, which is the highest level since the nation entered the euro as a member nation in 1999. In addition to this, ratings agency Moody's downgraded Spain's credit rating from A3 to Baa3, which is renowned as being one level above junk status among international countries. This is a direct response to Spain's failing banking system, which has driven the nations borrowing costs towards an unsustainable level.

SEE: Junk Bonds: Everything You Need To Know

With unemployment in Spain reaching a record high level of 24.6% in May 2012, the macro-environment and a vicious cycle of economic decline is also having a significant impact on consumer confidence and their levels of spending. Much more than this, however, there are genuine fears that the $125 million bailout package proposed by the eurozone leaders will be inadequate to repair the country's ailing economy, as it will simply add to an already burdensome and unmanageable level of debt. Indeed, there is even suspicion that the bailout will not be forthcoming, with contributing nations Germany and Finland insisting that Spain comply with more stringent conditions before the nations agree to a financial rescue package.

Zimbabwe: A Nation on the Brink
While Spain's future is decidedly bleak and uncertain, the long-term outlook for African nation Zimbabwe is even less prosperous. Although the exact sum of Zimbabwe's external debt has proved difficult to ascertain, the World Bank has estimated that it stands at an approximate 120% of national income, while a figure of $8 billion was referenced by Reserve Bank of Zimbabwe Governor, Gideon Gono, as recently as May. With this approximate debt level now outstripping the nation's gross domestic product (GDP), its economic decline is likely to be accelerated throughout 2012 and beyond.

This growing level of debt and economic underachievement has created significant social problems throughout Zimbabwe, and acted as the catalyst for rising national unemployment. In fact, the country has the highest level of youth unemployment in southern Africa, which has created a subsequent decline in the average young citizen's general standard of living, health and level of fundamental education. This is fostering a divisive cycle of economic depression and diminishing growth, and prompting continuing concerns of civil unrest in the near future. With this in mind, political reform may well hold the key to transforming the countries fortunes; the proposed elections of 2013 could set this in motion, should the requisite level of funding be sourced to host them.

SEE: Countries With The Highest Government Spending To GDP Ratio

Italy: Another Victim of the Eurozone Crisis
Rather like Spain, Italy has experienced significant turbulence as the eurozone crisis has taken hold. While its economic decline has not been as widely publicized as the developments unfolding in Greece, it remains uncomfortably close to bond yields that would make an already sizeable public debt suddenly unmanageable. The issues blighting the world's eighth largest economy are at least clearly understandable, however, and once again have its roots in irresponsible government spending and flawed lending practices.

For example, Italy's total debt as a percentage of its GDP stands at a staggering 314%, but despite this, the nation's level of household debt remains relatively low. Instead, it is the government's stringent labor laws and liberal welfare provisions that have created the most significant economic problems and contributed toward a state financial liability that is 111% of the GDP. Although the relatively new government of Prime Minister Mario Monti has now agreed to cut public spending by $32 billion over the next three years, as a way of bridging the cavernous gap between expenditure and income, the consequences for the nation's civil service and healthcare bodies have the potential to cause significant social upheaval.

SEE: An Introduction To The PIIGS

The Bottom Line
The global economic unrest is being felt in both established and developing economies, with the ongoing eurozone crisis having a particularly significant impact on nations worldwide. When you consider this alongside the consequences of an underperforming U.S. economy and the effect that they have on global trade and the open financial markets, it is clear that nations such as Spain, Zimbabwe and Italy must swim against an increasingly volatile tide, if they are to remain solvent and lay the foundations for sustainable growth.

Related Articles
  1. Investing News

    Obama Wants to Double Wall Street Regulation

    President Obama wants to double the budgets of the SEC and the CFTC over the next five years.
  2. Budgeting

    Is Living in Europe Cheaper than in America?

    Learn how living in Europe has financial advantages over living in the United States. Discover the benefits to take advantage of when it makes financial sense.
  3. Economics

    Does Big Money Hurt or Help Clinton and Rubio?

    Marco Rubio and Hillary Clinton lead their parties in raising money from Wall Street. Is that a help or a hindrance?
  4. Credit & Loans

    A FICO-free Loan? See SoFi's Super Bowl Ad

    Non-bank lender SoFi will air its first TV ad during Super Bowl 50. Here's how it's challenging big banks by providing an alternative approach to loans.
  5. Fundamental Analysis

    The Evolution of Obamacare Since Its Inception

    Find out whether the Patient Protection and Affordable Care Act, also known as Obamacare, has lived up to its lofty projections from 2010.
  6. Stock Analysis

    The Biggest Risks of Investing in Lockheed Martin Stock (LMT)

    Learn about defense contractor, Lockheed Martin, its leadership within its industry, and how the company can stay on top as the defense landscape changes.
  7. Investing News

    Brazil's Latest Export To China: Soccer Players

    Why are Brazilian soccer players moving to China?
  8. Personal Finance

    5 Places Where Your Travel Dollar Goes Furthest

    The dollar is pretty strong right now, but where is it strongest? Canada? South Africa? Europe? Here are five places to travel to right now on a budget.
  9. Stock Analysis

    6 Risks International Stocks Face in 2016

    Learn about risk factors that can influence your investment in foreign stocks and funds, and what regions are more at-risk than others.
  10. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
RELATED FAQS
  1. How many free credit reports can you get per year?

    Individuals with valid Social Security numbers are permitted to receive up to three credit reports every 12 months rather ... Read Full Answer >>
  2. Is Spain a developed country?

    Spain is a developed country. Nearly all organizations that analyze development status classify it as such. Spain has a strong ... Read Full Answer >>
  3. Is Italy a developed country?

    Italy is a developed nation with extensive infrastructure, a rich cultural history and control over several exports. Italy ... Read Full Answer >>
  4. How do mutual funds work in India?

    Mutual funds in India work in much the same way as mutual funds in the United States. Like their American counterparts, Indian ... Read Full Answer >>
  5. How much money does Florida make from unclaimed property each year?

    Each year, goods such as money, financial investments and physical property are either auctioned off or appraised before ... Read Full Answer >>
  6. Do mutual funds have CUSIP numbers?

    The Committee on Uniform Securities Identification Procedures (CUSIP) number is a standardized identification system used ... Read Full Answer >>
Hot Definitions
  1. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  2. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  3. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  4. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  5. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  6. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
Trading Center