The period since 2010 has evidenced a clear divergence in the growth paths of the selected states. German and Belgian GDP growth rebounded strongly in 2010 before moderating significantly in the period to 2012. Both of these economies experienced low levels of growth in 2013. Romania’s growth recovery commenced in 2011 (2.2%), slowed during 2012 (0.7%), before accelerating considerably in 2013 (3.5%). Ireland’s return to growth in 2011 (2.2%) was not sustained; the economy contracted by 0.3% in 2013. However, it should be noted that GDP is not the most accurate indicator for measuring Ireland’s economic growth owing to the importance of non-Irish multinational companies to the Irish economy. More relevant is the Gross National Product data, which indicates that the Irish economy grew by 1.8% in 2013.1 Greece, however, has exhibited declining GDP levels since 2008. This is due to both the structure of its economy and the scale of the reforms required under the external assistance programmes provided by the EU/European Central Bank (ECB) and the International Monetary Fund (IMF). Similarly, Portugal has witnessed falling economic activity since 2011, although its cumulative rate of decline in 2011–13 (6.1%) was considerably smaller than that of Greece over the same period (17.2%).
General government gross debt For the purposes of this paper, general government gross debt is expressed as a percentage of GDP.2 Figure 2 shows that the government debt position of all of the states under consideration deteriorated in the 2007–13 period, primarily as a result of the negative impact of the financial crisis. However, the scale of the additional debt accumulation varied greatly. For example, in Germany the debt ratio rose from 65.2% in 2007 to 82.5% in 2010, but by 2013—owing primarily to the return of economic growth—it had been reduced to 78.4%. However, the ongoing external assistance programmes in Greece and Portugal have been ac-
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1
GDP and Gross National Product are closely related measures. GDP measures the total output of the economy in a given period, i.e. the value of work done by employees, companies and those who are self-employed. This work generates income, but not all of the income earned in the economy remains the property of residents (and residents may earn some income abroad). The total income remaining with Irish residents is the Gross National Product, which differs from GDP by the amount of income sent to or received from abroad.
2
The general government sector comprises the central government, the state government, local governments and social security funds.