Major Economic Indicators of Europe
EU is all in mess. The crisis doesn’t seem to end. All the major economic indicators show that EU is reeling under endless pain which have been inflicted by the policymakers’ inability to read the ground realities. The crisis is the outcome of inflated economic figures that had no fundamentals behind it. Engineered math can only take you away from the basic economic principals. Here are few graphs showing how the onset of downturn changed every good looking EU data into a catastrophic presentation. The graphs precisely show how Europe has been thrown back more than 10 years in history.
UNIT LABOR COST
Unit labor costs plunged from a high of 6 to below –0.5 in just 1 year. This shows how the work force lost all its bargaining power with onset of crisis. High levels of unemployment and firing is still keeping Unit Labor Costs at negative area. These are the lowest levels seen in many Years.
Unemployment presents another grim picture of EU. Unemployment rate has been hovering around 10% which is very high when compared to previous 10 years.
Government deficit is 5.8% of the GDP which has recently recovered from a low of 8% deficit.
Government debt of EU stands at 86.2% of GDP. Government debt shot up with on set of economic crisis when ECB started bailing out EU economies. Biggest culprit were peripheral economies of PIIGS that caused irreparable damages to the Euro economy as a whole and it is also the major cause for further deepening on the crisis.
Labor productivity has always been high at the time of crisis. Point to note in this graph is that from 2007 to 2009 the labor productivity was constantly falling whereas if we look out all the other graphs above, they were showing good positive trends. Such low labor productivity is never desirable. It shows that the country is earning without working which unsustainable and catastrophic in long run.
Inflation levels are not out of control currently but there are possibility of high inflation anytime as excess money have been thrown into the economies and business sentiments have not improved accordingly. There might be a supply side problem which may send inflation sky rocketing.
GDP of European Union grew by 2.5% last quarter. This is largely because of good performance of German and French economies. Peripheral countries are still fighting hard to prevent themselves from falling into a deep recession.