The Asian stock markets have been trading with index declines this morning in the shadow of developing tensions on the island of Yeonpyeong between North and South Korea, with South Korea insisting on carrying out its planned military exercises. South Korea announced it will meet any possible North Korean response. North Korea, in turn, described the exercises as Seoul 'death wish'. As such, the KRX dropped 1%, the Japanese Nikkei declined 1%, the Chinese Shanghai exchange traded at a 2.3% decline, while Hong Kong's Hang Seng took a 1.2% dive.
While Ireland is fighting to rebuild its banking system, reduce its deficit, and end the crisis, the IMF announced that the budget cuts carried out by the Irish government will not be enough to complete the goal of reducing its deficit to 3% of the GDP before 2015, and that the Irish government will be required to either make additional cuts or find other ways to raise its tax income. The IMF predicts that the Irish economy will grow by 0.9% in 2011 and by 1.9% in 2012.
In addition, the Moody's credit rating agency downgraded Ireland's rating by five levels, from a level of Aa2 to a level of Baa1, issuing a negative credit rating on Ireland. On December 9th, the Fitch credit rating agency had downgraded Ireland by five levels from A+ to BBB+. Furthermore, Moody's announced that it would consider downgrading the credit rating of Greece, currently poised at Ba1.
