Saturday, March 02, 2013

Dramatic Drops In Southern European 2012 CA Deficits

The Southern European crisis economies had a really awful 2012 in terms of production and employment, but they at least saw great progress in reducing its external borrowing. Here are the final numbers on current account balances, with the 2011 number in parenthesis

First, in euros
Greece: -€5.6 billion (-€20.7 billion)
Portugal: -€2.6 billion (-€12.0 billion)
Spain: -€8.3 billion (-€37.5 billion)
Italy: -€9.5 billion (-€48.4 billion)

Second, as a percentage of GDP
Italy: -0.6% (-3.1%)
Spain: -0.8% (-3.5%)
Portugal: -1.6% (-7.3%)
Greece: -2.9% (-9.9%)

Italy and Spain saw the biggest drops in absolute amounts, but relative to GDP, Portugal and Greece in particular saw far greater drops. It seems likely that all countries will have surpluses in 2013. Which means that there is "light at the end of the tunnel" for them, as first the Baltic countries and then Ireland saw their slumps end and recoveries start after they had achieved external surpluses.