The Rajoy factor in Eurozone dynamics

Is Rajoy (Spanish PM, EPP) a Merkel or a Hollande ally? Or part of a PIGS initiative?

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

(3) Eurostat - Inflation rate annual rate Jan 2011/Jan 2010

economic modeling: What happened to the Irish and Spanish economies?

Ireland + Spain: Both are both experiencing jobless rates reminding of the 80s!
Does it mean that super growth of recent years lacked fundamentals?

More on economic modeling:
Was the Celtic Tiger model that many sought to copy in recent years, faulty in its fundamentals?

Plus: What happens when an economy over-depends on construction (US, subprimes, Spain, etc) or financial services (NYC, London)?

Q1 2009 GDP in Germany, France, Spain

The GDP stats for the first quarter of 2009 (Q1/2009) are in for Germany, France as well as Spain.
a) France. The fall/shrinking of the GDP was 1.2% (which is in line with expectations) compared to the previous quarter. Since in Q4/2008 the stat was -1.5%, this has given rise to views that the recession in France "may" be easing. No comment! By the way, the French Economy Ministry expects the French economy to contract by 3% in 2009.
b) Germany: Driven by lagging exports and investment, the GDP drop in Q1/2009 was a record 3.8% (!!), ie the worst GDP performance since re-unification (compared to the previous quarter), yielding a year-on-year drop of 6.7%, against a 6% prediction for the whole year 2009 made by the German government! The Q4/2008 drop, 2.2%, was the previous record low until the stats for Q1/2009 came in!
Is Germany (along with other traditional exports - trade surplus world "champions" economies) paying a price for their over-reliance on exports?
c) Spain: In Q1/2009. GDP fell 1.8% compared to Q4/2008 and shrank 2.9% on a year-on-year basis, based on preliminary data, making this the worst GDP performance since 1959! The Spanish government has predicted a GDP drop of 1.6% for 2009

Spain, which joined the EEC/EU in 1986, enjoyed 14 years of consecutive growth until it entered into recession Q4/2008. It seems that many experts think that Spain has major "economic imbalances" and that this will delay its rebounding. It also seems that the construction industry's major perils are a core driver of the Spanish economic recession.