Nominal GDP in the European Periphery

The graph below shows projected nominal GDP for the European periphery (plus Germany as a benchmark) over 2007 to 2016, based on the IMF’s new World Economic Outlook database. (Indexed to 2007=100.) It shows that Ireland is projected to return to its 2007 nominal GDP in 2016. While Ireland is projected to be the fastest-growing economy between 2010 and 2016, its initial decline between 2007 and 2010 is far greater than in the rest of the periphery.

27 thoughts on “Nominal GDP in the European Periphery”

  1. When i first glanced at it, i thought ‘for once a graph that shows some good news, look how well we’re doing!’ only to realise that we’re currently at the bottom of that curve.

  2. I love those upward only graphs of the future. They are ubiquitous. I saw one from 1944 recently. It showed Albert Speer projecting German missile production out into 1946 and beyond.

  3. According to behavioral finance sience, economists are able to “project” finance future no better than flip of the coin.
    I just cant see how Ireland can be the fastest growing economy in few years.
    Look at the fundamentals people!

    taxes are brutal,
    oil is climbing,
    gov spending can ( will) only shrink,
    Level of debt is unsustainable,
    banks are bankrupt (they borrow every two weeks to put money into ATMS)
    demografics are terrible,
    inflation is ONLY STARTING
    Interest rates are going only one way – dramatically up

    If we make any money we have to pay interest on the bailout!

    What projected growth are they talking about?!

    More f**** propaganda!

  4. (2016 – 2007) = 0. That’s real fancy math!

    By 2016 oil prices should be where? And that will leave us where? We are going to have a ‘dead cat bounce’ – all that QE nonsense. Then it will be another bounce. We will be at this for a while yet.

    BpW

  5. How convenient. Straight lines of growth with slightly different trajectories for the whole periphery starting from tomorrow till 2016. Its believable! 🙂

  6. Ireland, the fastest growing economy from today until 2016. Yeah, and pigs can fly.

    Pie in the sky nonsense.

  7. The graph is totally absurd and ridiculous. Factor in the recent earthquake/fukushima Japanese effects on global GDP, which will have an inordiante impact on our open economy, plus the brake of our banking crisis and imminent meltdown, revised IMF figures, that graph surely for Ireland must rank as a Weapon of MAss Destruction for Ireland, …….unbelievable, don’t even think of current discussions over our CT

  8. Sorry. The graph is out of date already. The IMF have reduced their growth forecast for Ireland from .9 to .5 for next year.

  9. @Eamonn Moran

    the graph shows nominal GDP, using the latest IMF data. Real GDP is projected at 0.5 percent and an increase in the GDP price deflator brings it up to 0.9 percent.

  10. @Philip

    Given the ongoing sport in deriding any sort of economic forecast especially of a macro variety (and rightly so as they change by the week) is alive and well – is it possible perhaps to do a backtest on IMF world growth predictions versus actual outcomes over the past decade to see the extent of the errors in these forecasts and by applying such average errors to actual we should in theory be able to establish a range of possible outcomes as opposed to this pretty daft binary forecast.

    It never ceases to amaze me why the IMF and other macro forecasters seek to pin their collective good names on numbers they know are going to be incorrect, and then leave themselves open to contributors like those on this site and probably thousands of others to deride their work. Why do it?

  11. Wow! Ireland fastest with Spain coming in a close second… makes me regret uprooting the family and moving to Australia…not!!

  12. Well at least all these economies are projected to be moving in tandem. This will ease concerns over inappropriate ECB rates for individual states 🙂

    Now all I need to do is convince myself.

  13. Yields or Bust
    they do it cos they know that most human population knows nothing about basic economics.
    There is a reason why 5% controls 90% of money.
    Also you cant go up on the stage and tell people that all they have is not real wealth and their money isn’t in the bank.It has all gone into housing
    They have to get reelected you know. They have to give people hope. Heard needs it so they can plan the future

  14. @Philip Lane

    The figures are distorted by two factors:

    (a) They use nominal GDP instead of real GDP.

    Since when has nominal GDP been the measure of economic growth? If it was the most accurate measure, then why not just print lots of money and allow nominal GDP to soar, ignoring the fact that prices would also be soaring. Between 2007 and 2010, real GDP in Ireland fell by 11.8% and not the near 20% shown in the chart. Similarily, because the other countries all had much higher inflation in that period, their real GDPs performed much worse than than their nominal GDPs. I dont have the figures to hand, but, just from memory, Spain, Greece and Portugal all recorded falls in real GDP of the order of 3% to 5% between 2007 and 2010, while Germany’s was close to zero. In short, if you use real GDP instead of nominal GDP, the gap between Ireland and the others between 2007 and 2010 is about 8%, rather than the 20% shown in the chart.

    (b) They start in 2007, which takes them out of context.

    Germany and Portugal had enjoyed virtually zero real GDP growth between the mid 90s and 2007, while Ireland’s real GDP more than doubled. Spain and Greece also enjoyed strong real GDP growth in that period, although not nearly as strong as Ireland.

    The IMF are forecasting that real GDP growth in Ireland will move above that of the others sometime in 2012 and stay there until 2016 (at least). If we take GNP instead of GDP, which was the preferred measure for most economists until they flip-flopped following the recent GDP/GNP figures, then real GNP growth in Ireland has allready gone above that of the others, up 4% since Q1 2010 and up 2.8% y-o-y in Q4 2010.

    If we want a longer-term perspective, I suggest a chart showing real GDP (or GNP, if preferred) growth between 1986 and 2016, incorporating the IMF forecasts for 2011 on. That would show real GDP (or GNP) growth in Ireland massively outperforming the others for about 85% of that period, and underperforming the others only for a relatively short period from 2007 to 2010/11 or so. Indeed, if we go back further, and cover the half century from 1966, when some of us celebrated the half-centenary of the Easter Rising, to 2016, when some of us will celebrate the centenary of the Easter Rising, it will be found that Ireland’s real GDP (or GNP) growth rate will have been well above the EU and OECD averages for about 40 or those 50 years.

  15. @JtO

    My focus on nominal GDP is because this is the key for debt/GDP dynamics (our debts are nominal).

    I agree it is important to keep in mind that cumulative long-term performance in terms of real GDP in Ireland (even post-crash) has been far above most other European economies.

  16. @Brian Lucey,

    I’m sure it hasn’t escaped your notice that getting back to where we were in <10 years is a projection. We had the GUBU decade from ’77-’87. This one has been even more spectacular – the GUBU one was quite low on the Richter scale of policy stupidity. This one deserves its own acronym – any thoughts?

  17. @ Philip

    How do these predictions factor in unlikely possibles, such as the effects of:

    (a) War
    (b) Earthquakes
    (c) Volcanoes
    (d) Other

    Are they based on an idea of: ‘if nothing surprising happens’?

  18. @ Pongo: Them oil pices. Well, let me just consult my Magic Spell Book. “Ah, yes …. Oh gawd! That can’t be right. No one saw THAT coming!”

    Please send your ‘contribution’ in a plain envelope. Thanks. 🙂

    BpW

  19. @Philip Lane

    Dismal. truly dismal.

    Lost decade; lost generation; potential path-dependent slide in perpetual catch-up to who knows where …..

    …. gotta bust present dynamics somehow ……… somehow …

  20. @grumpy

    Need to look at both wings of the kapital-labor relation …. and where they start from ………

    Unit Labour Costs in the EuroZone & Unit Capital Costs

    http://www.levyinstitute.org/pubs/wp_651.pdf

    Study the graphs ………… the tell a real story …. Germany, as always the benchmark …… and if Germyan and French Economic Nationalism continues, then entire European Project in serious jeopardy …. we were doin OK on both fronts until the PD disease infected the body politic …. and ran riot throughout Fianna Fail ……… looks like the present EZ ‘cure’ is a decade of the austerity_rosary and a lost generation in between ……. how do we get off this Socialization or convince others in EU to get ‘real’ on a progressive EU as distinct from a sheep farm for the Globalized Financial Sector ………

  21. From the folks whose 1992 World Economic Outlook predicted real GDP growth for Ireland of 1.7% adn 2.4% for ’93 and ’94 respectively.

    Actual growth for 93? More like 3%.

    94? More like 7%.

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