Monday, March 7, 2011

Eurozone systemics: GIIPSB 44% of pop 39% of GDP!

Recent ECB Pres & some BoD members' comments re rate hike potential raise IMO the issue of what kind of economic governance the EA17 need & by whom!

Eg. see "ECB's Gonzalez-Paramo: April rate hike possible" and note the argumentation:

"... Asked about the impact of a rate hike for Spain, whose economy is recovering at a slower pace than others in the euro zone, Gonzalez-Paramo said the ECB must think about the euro zone as a whole rather than individual countries. ..."

The Eurozone as a whole? This prompted me to table some insightful Eurozone statistics & systemics.

Today, I present the first part, that covers Italy, Spain, Ireland, Greece, Portugal as well as Belgium:

Country ... % pop .... % GDP (1) ...... Q4 growth (2) .. Inflation (3)
Italy ......... 18.21% .... 16.94% .......... +1.3% ............... 1.9%
Spain ...... 14.25% ..... 11.71% ......... +0.6% ............. 3.0%
Greece .... 3.41% ........ 2.64% ......... -6.6% ............... 4.9%
Portugal ..3.22% ....... 1.83% .......... +1.2% ............... 3.6%
Ireland .... 1.37% ........ 1.82% ........... N/A ................. 0.2%

Sum
% of Eurozone population: 40.46%
% of Eurozone GDP: 34.84%

plus:
Belgium .... 3.25% .......... 3,76% ................. +1.8% ............... 3.7%


So BPIIGS
% of Eurozone population: 43.71%
% of Eurozone GDP: 38.60%

So PIIGS + BEL: 43.71% of the Eurozone population, 38.6% of nominal 2009 GDP! Quite larger than most would expect or think off hand!

Thus the strategic policy question: Do economic conditions in Spain + Portugal + Italy + Greece + Ireland + Belgium (6 Euro members, 43.71% of the Eurozone population and 38.6% of Eurozone's nominal 2009 GDP) justify Euro rate hike "thoughts" recently expressed by some central bankers in the EZ?

3 of the PIIGS plus Belgium have a January inflation rate above the 2% ECB target: Greece 4.9%, Belgium 3.7%, Portugal 3.6% and Spain 3%. The Greek rate that comes in spite a 6.6% reduction in nominal GDP in Q4 of 2010, is probably driven by new taxes (raises in VAT, etc) part of its budget consolidation effort.

Tomorrow: The full picture of the Eurozone 17 and more insightful data and syllogisms!

Footnotes
(1) Nominal GDP (2009), Source World Bank
(2) Q4 2010 GDP compared to Q4 GDP 2009. Source: Eurostat. Estonia and NL based on not seasonally adjusted data


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BRs
Nick

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