Graphs of the day: the mediterranean current account deficits are gone

The large current account deficits of the southern European countries are gone (graph 1).

* This is not mainly caused by increases in productivity and a surge in exports. Average productivity in Spain is increasing but that’s caused by the decline of construction, which has lower productivity than the average of the rest of the economy. Wages in Greece have declined with about 20% vis-a-vis competitors – but as Greece first has to establish an export industries this has not yet led to any kind of clear competitive advantage. Greek exports of goods and services (including tourism) actually declined, in 2012-IV!

* It is, mainly, caused by the Great southern European Depression. High interest rates, dramatic declines of domestic demand and unprecedented unemployment as well as some decline of oil prices caused imports to decline.On a more detailed level the real changes are mainly in the goods- and income accounts, not in the services accounts.

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Source: Eurostat (graph 1)