Saturday, August 25, 2012

Weak Euro Favors European Core Over Periphery

Sober Look asks the question, Who really benefits from the weak euro? Combining data from a couple of charts reveals the percentage of a country's GDP from exports to outside the Eurozone:
Based on this data, it becomes less of a surprise that Ireland’s economy has turned around the most of the bailed out countries.

What’s striking is that after Ireland and Belgium, the next four countries that benefit from a weak-Euro policy represent the core. Considering the periphery’s relatively small percentage of GDP from extra-Eurozone exports (with Spain not even making the list), further weakening of the Euro can not be expected to return those countries to economic growth or a sustainable fiscal position. With governments still being pressured to contract deficits, the only remaining growth engine is a generally indebted private sector.

The ECB may finally recognize the necessary steps to prevent a collapse of the EMU, but future growth remains elusive.  

1 comment:

  1. This is not a very good list. Ireland's exports are mostly a fiscal accounting trick by multinationals that are based there so as to pay less taxes. It's not that they are manufacturing and exporting.
    50% of Spain's exports are outside the Eurozone, and these are growing fast. In fact Spain's exports have grown by more than 35% in the last 3 years.