The Fear of Catalonia Independence
Spain is the fourth largest economy in Eurozone and fifth largest country in European Union. The average GDP for the country amounts USD1.2 trillion while among the 17 autonomous communities, Catalonia contributes about 20 percent of the country’s growth.
In Catalonia, this community (otherwise known as state or province in other countries) comprises 7.5 million population compared to an estimated 46 million on countrywide record. This community region spans on Northeast region of Spain with coastal line beach resorts on Coasta Brava and the highly appreciated Barcelona as the capital city likened by many tourists.
It would take no wisdom to comprehend that the Catalan Government is one of the most efficient and richest entity while compared to the other 16 communities. In term of economic growth, Catalonia pays the most taxes to central Government of Spain. This has become the spark of division in the autonomous community to fight for independence.
On 9 October, the Catalan Government ran a referendum to become independent amid strong objection by central Government. Sources concluded that 90 percent votes have favoured for it despite no official result has yet been announced. Euro currency and stock markets in European region poised for panic button in case of undermining danger of the national split.
The Spanish central Government declares for the referendum to be clearly illegal. Central leaders have warned of 2 possible actions that could be applicable if Catalan Government announces independence. First, the enactment of article 155 could remove the autonomy status of Catalonia and render all policies of the community Government to be invalid. Second, the implement of martial law or state of emergency in Catalonia. By doing so, there may be bloodshed through military violence that will take some leaders into detention.
On a larger scale of observation, European Union (EU) leaders have been worried of the Spain’s rout because the unwelcome independence of Catalonia could lead to the next exit of EU bloc. After U.K. voted to exit from the EU bloc, this hairline crack could lead to a huge irreparable division among European Nations if the unity is jeopardised.
Following the dormant behaviour of Catalonia, European stock began to climb while Euro currency has been stabilising. American and European stock indexes have been edging higher while the global watchers are waiting for U.S. FED to unfold the trimming exercise this month. Meanwhile, Iraq central Government has sent troops to Kirkuk that is oil-rich and wants to declare independence, causing oil prices to escalate. More excitement in market will be revealed towards end of this month. Stay alert.
~ Dar Wong is a registered Fund Manager with 28 years of investment and trading experience. The expressions are solely his own. He can be reached at email@example.com
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