Thursday, May 30, 2013

30/5/2013: That fiscal adjustment race... where we are?

How much more adjustment needed for Ireland to reach fiscal debt stabilization? Ok, nice folks at Deutsche Bank Research have done some plots and:

Which is, of course IMF number of ca 5% of GDP, and it puts Ireland neatly ahead of all peripheral states. We are, afterall, in a better position... except... well, except of one snag: GDP is not something that matters much for Ireland. Instead - we are more like a GNP economy, by which metric the primary adjustment required for Ireland to reach debt/GDP stabilisation is more like... 6.25% of GNP which puts us right at Portugal's doorsteps. Now, consider that Ireland has started the crisis well ahead of all other peripheral states and went into the Troika programme well ahead of all peripheral states, save Greece. Which means that at least a year ahead of all peripherals, we are barely ahead of them in distance to target. Yep, you know - that race ain't over until it is over.


Anonymous said...

We will be grand once the punt nua comes back,not long now france and italy imploding lol, FUN summer ahead

Seamus said...

If it's a race then surely it matters where you start from.

2009 Primary Deficit, %GDP

Ireland -12.5
United States -11.6
Greece -10.4
Spain -9.9
United Kingdom -9.9
Portugal -7.5
France -5.4
Netherlands -4.1
Cyprus -3.9
Canada -3.9
Finland -3.3
Denmark -2.4
Belgium -2.2
Austria -1.9
Sweden -1.9
Italy -1.0
Germany -0.8
Switzerland +1.1

TrueEconomics said...

That is also true, Seamus. From academic point of view. From markets point of view, there is no memory.

Ton said...

Could I ask: why do you say 'GNP, not GDP'?