The European economic crisis is having an impact around the world, and causing concern that if it is not ended soon it could spread to a variety of countries that depend on Europe to buy their exports.
Many developing countries live or die economically on the strength of their exports. Whether it is workers in India making auto parts, or those developing software, coffee plantation workers in Laos, or carpet weavers in Egypt - all have one thing in common. Their most important buyers are people in Europe and other developed regions.
“For most of the countries, the European Union is one of the most, if not the most, important business partners for trade, for investment, for imports and exports,“ said Philippe de Buck, director general of BUSINESSEUROPE, an organization of European chambers of commerce.
But as Europe’s financial crisis forces governments to cut their budgets, and slows economic activity, many consumers have less to spend. And that is having a ripple effect around the world.
Even a big economy like China is not immune from Europe’s problems. The port of Shanghai is a major gateway for the country’s products, but the government announced that its meteoric growth in exports slowed in September due to a drop in demand from Europe and the United States.
Economics researcher Zolt Darvas at the Bruegel research organization in Brussels says low demand will likely continue for several years in some European countries, and maybe for longer.
“The impact will largely depend on whether the European financial crisis will be contained or whether it will escalate," Darvas said. "If it will escalate and Europe ends in a deep recession, certainly the impact in the rest of the world, not just on emerging countries, but also on the U.S. and other advanced countries, may be very, very adverse.”
But former EU economics official Mario Monti notes that the continent still has several strong economies, and he says overall the problem may not be as bad as it appears.
“Of course, there is a huge combined banking and public budget crisis in several eurozone member states," he said. "However, if we take the eurozone as an aggregate, the problem is smaller than it is in the U.S., in the U.K. or in Japan.”
Monti believes relative economic strength in some areas will help Europe work its way out of the current crisis over time.
But that may be small consolation for those who depend on the continent to be a strong market for their products and services.