Saturday, November 8, 2008

A Narrowing Gap in Europe

This is a re-post of my original blog at (in Slovak), which has been visited by more than nine thousand internet users by now. I am attaching the graph from there to CEEW as well.The chart above shows the development of GDP per head relative to the EU average in three major Eurozone economies as well as several CEE countries. The curves incorporate price levels in various countries through purchasing parity standards (PPS). Thickness of a curve represents roughly the size of a country's population.
One can observe a significant downward movement in case of Italy - by about 20 perc. points within fifteen years. "A lost decade" is currently being felt in Hungary, where GDP per person compared to the EU average is stagnating. Other countries of the region however experience a considerable convergence towards the income levels of the EU average. Slovenia, one of the most succesful countries, will most probably in the medium term overtake its neighbor Italy in GDP per person. This would be the first case of a former Eastern Bloc country to reach higher incomes than a major Western European power.