Sometimes I humour/inform myself by going either to eurostat (statistics for the European countries) or destatis (German statistics). Yesterday evening I went to eurostat to take a look at how bad is it really and what has lead to Mario Draghis statements that the turning point has been reached.
The only thing I did find after some short digging had to do with the trade balance so export minus import. One could argue that this figure might be of interest since when the population is not able to pay for imported material then they will stick to buying domestic products themselves and if the prices have decreased so significantly domestically then they will also be able to start to export goods to other richer countries.
When I look over the list (a quarter based list dating back to Q2 in 2010) one could see that Greece, Spain, Italy & Portugal had a negative trade balance besides from Q3 2012. Then all of them exported more than they imported.
Of course some countries are heavy importers or exporters but for turning a country around getting fresh money via export is of importance.
What I found a bit disturbing with the list was that France has been and still in Q3 2012 had a massive negative trade balance as well did UK (big importer), Romania and here was a surprise for me that also Poland had for this entire period a negative trade balance!
Out of pure interest I started to focus on three countries that in my opinion has had the best recovery and also some thought concerning why this came about... What is the trend for a quick recovery? And why might it be like that?
If we take a look at Estonia, Latvia and Lithuania these countries had in January 2008 an unemployment rate of 4.4 %, 6.5 % and 3.6 % each. In July 2008 the unemployment started to increase rapidly and it reached its maximum peak in Q1 of 2010 (so 17 months later) when the unemployment rate was ~19 %, ~21% and ~19%. Since then the employment rate has steadily increased in all three countries and was in December 2012 down to 9.9 %, 14.4 % and 13.3 %. The unemployment rate is still very high in comparison to January 2008 but at least for the last three years it has gone in the good direction.
If we take a look at their GDP growth Estonia, Latvia & Lithuania we see that in full year of 2009 they had a negative growth of -14.1 %, -17.7 % and -14.8 %. Since then almost all of them (besides from Latvia in 2010) have shown a positive GDP growth.
If we then instead take a look at Greece then they have had a GDP growth that has been negative since 2008. However it has never been an extreme drop like it was in Estonia, Latvia & Lithuania but small negative steps each year.
What we know today is that Estonia, Latvia & Lithuania is on going very strong and improving year by year. Greece... had their debts written down... made a "softer" landing with their crisis and are still by no means out of the crisis. The Greek and other southern Europeans who once had saving in the bank accounts have probably eaten up all that capital after these five years and are probably getting more and more desperate and desperate people make bad decisions.
What I wanted to get at was. Sometimes it might be better to take a punch straight on because the pain goes quicker away and you will sooner see the light in the end of the tunnel! The spirit and hope of the people will then also remain leading to quicker recovery.
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