Daily Management Review

Statistics of Eurozone's Crisis


The economic crisis is still being felt in the euro area. The figures clearly show which countries with the single European currency suffered the most, and how they are struggling with the consequences of the crisis.

 The Greek economy has been hit hard by the crisis - its GDP fell by more than a quarter. No other euro zone country’s economic has experienced such dramatic decline.

Since 2010, a total of five states - members of the monetary union - were forced to seek support from the international community. Greece, Ireland, Portugal and Cyprus have become officially registered recipients of financial assistance from the European stabilization fund. The European Union, the European Central Bank (ECB) and International Monetary Fund (IMF) granted them loans. In turn, affected countries have the obligation to implement austerity programs and reforms - all under the control of creditors.

Ireland was first that came from under the care of the stabilization fund in December 2013. In May, 2014, it was followed by Portugal. Assistance programs in respect of Cyprus and Greece are still in effect.

Although Spain has received billions of dollars in financial contributions from the EU to support the banks in 2012, the country has never been the official participant of the program of aid. Therefore, it is not necessary to align management's own plans to reduce government spending and reform with its creditors.

Cyprus - the smallest Eurozone country, besides it has requested assistance of the stabilization fund just in March 2013. For this reason, indicators of Cyprus are not reflected below.

 Taxes and conservation programs

State revenues reduced due to the economic recession - and this despite the fact that many of the taxes were increased. At the same time, the governments of the affected countries reduced their costs in order to follow the requirements of austerity.

 Debts grow

Public debt has grown in all countries of the Eurozone. Especially sharp increase was observed in Spain and Ireland, the debt load in which before the crisis was much lower than that allow the rules the European Monetary Union.

The debts of the private sector include loans to individuals and businesses, not banks. The total amount of debt and the debts of private entities reached an incredible level - in the case of Greece and Portugal, it exceeds the GDP more than three times, and in Ireland - almost four.

 No work

The downturn in the economy has led to higher unemployment. In Ireland, it has doubled in size, in Greece – got four times bigger. Every fourth resident of Greece and Spain is jobless today. These figures are even more pitiable among young people up to 25 years. High unemployment, the reduction of social payments and benefits, and tax increases have led to the fact that many voters turned away from known parties and ensured the rise to power of radical political groups. At the same time in Germany during the crisis, it was even noted a decrease in the unemployment rate.
 Success criteria

One of the most important economic indicators for creditors - the so-called primary surplus of the state budget. This is the money - the difference between revenues and expenditures of the state budget - which remain in the treasury until the payments on public debt. This figure is considered one of the criteria for the success of the policy of austerity. If this number is too small, or even with a minus sign, it means that the debt can be paid off very slowly or only through new loans at all.

During the period from 2008 to 2014, Greece and Ireland have achieved the greatest success in increasing primary surpluses. Germany, by contrast, could afford some reduction in this indicator.

The data show that none of the countries, which the economic crisis has affected so far, has not been able to ensure that creditors expect from Greece today. After lengthy negotiations, they came to the same requirement - a primary surplus of Greek budget should be one per cent of GDP.

For comparison: in the first aid program in 2010, the conclusions came from the fact that the primary surplus of Greece in 2015 will be equal to about six percent of GDP, two years later, this strap has been reduced to 4.5 per cent - totally unrealistic expectation, as it became clear later.

source: dw.de