EU transfers to the Baltic countries (++) and Greece (–)

About one and a half years ago we published, on this blog, some data from Rainer Kattel and Ringa Raudla on transfers to the Baltic countries. Look here and here. These transfers explained why government deficits in the Baltics were, considering the crisis, relatively low compared with southern European deficits. What happened since (the Kattel/Raudla data did not include 2011 and 2012)? The capital transfer data from the balance of payments data of Eurostat which I use are not entirely consistent with the data used by Kattel and Raudla – but it is clear that, if anything, EU transfers to the Baltics stayed level or even increased while transfers to Greece actually decreased (I’ve been tinkering a bit with the details of these data – almost all the money seems to come from Brussels).

Note that Greek GDP shows a sharp contraction in 2009-2012, which means that transfers, expressed as a % of for instance 2008 Greek GDP, would decrease even more while the opposite holds for the 2011 and 2012 data for the Baltics. Transfers to the Baltics (at least Latvia and Estonia) seem to have increased faster than GDP which, considering high unemployment and low interest rates, means tha there must have been a considerable multiplier effect, too. By the way – if Italy would have gotten an additional transfer of 1% of GDP (or if it had paid an interst rate which had been 1% lower, on average) Italian government debt would show a declining trend, at the moment. But maybe that window of opportunity has already closed, by now,. Billion wise, trillion foolish.