Amid the focus in the last few days on Greece, I was reading an interesting New Yorker profile of Matteo Renzi, the Prime Minister of Italy It is a very upbeat piece, so upbeat that the authors seemed not to have bothered to look at just how badly Italy has been doing.
From the IMF WEO database, I extracted the data on growth in real per capita GDP from 1998 (just prior to the 1 January 1999 start of the euro) to 2014. Not all the countries have been in the euro for the whole period, and there is no data for 1998 for Malta.
The results were mostly unsurprising. The four countries formerly in the communist bloc have done best of all over that period, followed by Ireland. But at the other end of the chart, I was surprised. Greece has a 27 per cent unemployment rate, and has had one of the deepest declines in GDP in any advanced country in modern times. And yet over the sixteen years taken together, Italy has done slightly worse than Greece. It wouldn’t have surprised me if this had been a measure of real GDP per hour worked – Greek labour productivity has held up reasonably well through the recession – but this is GDP per capita.
Italy has had a less rocky ride than Greece: even now its unemployment rate is “only” 12.4 per cent. But it is not as if the economy is now rebounding either. In the last eight quarters, cumulative real GDP growth has been zero. No wonder people think that Italy might be the next link in the chain to break, if and when Greece leaves the euro.
Out of interest, here is how the euro area countries have done since 2007, just prior to the recession and initial crisis of 2008/09.