Everyday Economics — Sunday Chart of the Week

A Closer Look at the EU 28 Economic Growth Rate

by Elaine Schwartz    •    Aug 17, 2014    •    331 Views

Our Sunday Charts

For the most recent data on the EU 28, the real GDP growth rate is .2%, the overall unemployment rate is 11.5% and government debt averages 88%.

Not so good.

As aways, though, the averages can be misleading. So let’s look a bit more closely.

The Charts

Considering the growth rates of different countries, Greece, Italy and Cyprus have a contracting GDP.

European GDP growth rates

From: Graphic Detail, The Economist

Similarly, for unemployment, Greece, Italy and Cyrus are close to the top of the list.

Europe's Economic Growth details

From: Graphic Detail, The Economist

Finally, for the relative size of their public debt, Greece, Italy and Cyprus borrowed a disproportionate amount when we compare their loans to GDP.

Why compare debt to GDP?

Just think of a home mortgage to grasp why we compare debt to GDP. Someone who earns $50,000 a year—sort of comparable to GDP as national income—should not borrow $1 million. However, a household with an annual income of $5 million can afford a $1 million loan.

Economic Growth and debt for Europe

From: Graphic Detail, The Economist

The Bottom 3 and The Bottom Line

Because of ongoing problems, I selected Greece, Cyprus and Italy as the bottom 3. We should add, though, that Germany’s GDP contracted and France’s stagnated during the past quarter.

Our bottom line: When you have disparate rates of economic growth, unemployment and debt, for the 18 countries in the euro zone, the separation of monetary and fiscal power is problematic. Consequently, Greece, Italy, and Cyprus have less control over their economic difficulties.

Sources and more...A good source for the numbers, Eurostat was my starting point, for the charts, The Economist was ideal. and then for some analysis, I do recommend this article.

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