Visualizing Economic Problems in the European Union

Now, we will move on and look at a second problem, which is the detection of macroeconomic imbalances in different countries, particularly within the European Union, which, in my opinion, failed and increased the damage of the financial crisis.

In this chapter, we will take a look at what our problem is and create clusters for the countries that have been identified as suffering from macroeconomic imbalances. We will cover the following topics:

• A general overview of economic problems in the European Union
• Clustering countries based on macroeconomic imbalances

A general overview of economic problems in countries

The worldwide financial crisis of 2008 started as a bank-level crisis that closed the flow of money and increased financial instability. During the first few months, the impact was felt primarily by financial institutions and intermediaries. After that, however, it then reached macroeconomic dimensions, threatening the stability of entire countries.

The European Union, the International Monetary Fund (IMF), and the European Central Bank (ECB) took urgent measures to avoid the insolvency of some countries. As a result, Greece received €110 billion in 2010 to pay its public debt. This loan was the start of further expenditure. Ireland received €87 billion euros in November 2017 with the same aim. Problems were then identified in Portugal in 2011 and an additional loan was received by Greece. Spain and Cyprus also...

Clustering countries based on macroeconomic imbalances

In this section, we will develop an unsupervised model to visually detect macroeconomic problems in countries and also understand a little more about the main drivers of credit ratings. We will start by creating a cluster of the countries with macroeconomic problems. In the next chapter, we will move on to predicting the credit ratings based on these clusters.

Throughout this chapter, I've tried to make an effort to reiterate the code from the previous chapters.

Let's get started!

Data collection

As in the previous model, we need to collect the largest amount of data possible. First, we need the macroeconomic indicators of countries to analyze the macroeconomic...

Summary

In this chapter, we introduced the economic crisis that's experienced by different European countries. We obtained the data and analyzed it. Then, we developed a visual tool to compare the countries using different variables at the same time.

In the next chapter, we will try to create a rating model. We will assign different scores to countries according to their economic situations. Let's see if we are able to predict the ratings of different countries!