Sunday, December 02, 2012

Southern European CA Balance Update

Here is an update to the current account balance developments in Southern Europe, now for the January-September period (balances for January-September 2011 in parenthesis):

Spain: -€16.5 billion (-€30.3 billion)
Italy: -€15.6 billion (-€43.1 billion)
Portugal: -€2.1 nillion (-€9.2 billion)
Greece: -€3.5 billion (-14.8 billion)

Compared to the previous update, Greece and Spain made the biggest improvements while Portugal's rate of improvement slowed somewhat.

In absolute terms, Italy made the by far biggest improvement, €27.5 billion, but that reflects that Italy is the by far biggest economy, roughly 1.5 times bigger than Spain, roughly 8 times bigger than Greece and roughly 10 times bigger than Portugal. Relative to GDP, particularly Greece but also Portugal made much bigger improvements than Italy and Spain. Here are the improvements relative to GDP:

Spain: 1.7 percentage points
Italy: 2.3 percentage points
Portugal: 5.9 percentage points
Greece: 7.5 percentage points

The large improvement in the case of Greece is particularly in recent month to a high extent due to lower interest payments to non-Greeks following the writedown of privately held bonds and a lower interest rate on bonds owned by other government