European Sovereign Debt Crisis: Pertinent Statistics
Posted by Jason Apollo Voss on Nov 14, 2011 in Blog | 0 commentsIt is one thing to talk about the European sovereign debt crisis and its many details and another to look at the statistics that are germane to understanding the crisis. Here then are some select data to help shape the story, and provide context for understanding some of the issues.
In the table below, the compound annual growth for debt in 2006 and projected through the end of 2012 is shown in the second column. Next is the compound annual growth of gross domestic product from 2006 through the projected result for 2012. These two are then compared to one another to derive a ratio of compound annual growth in debt to the compound annual growth in gross domestic product.
Projected Debt to GDP Growth Rates 2006 – 2012
| Debt CAGR 2006 – 2012 | GDP CAGR 2006 – 2012 | Debt/GDP CAGR 2006 – 2012 | Rank | |
| Austria | 5.2% | 2.8% | 1.85 | 14 |
| Belgium | 3.9% | 2.9% | 1.35 | 15 |
| Cyprus | 4.2% | 3.8% | 1.11 | 16 |
| Estonia | 7.0% | 3.4% | 2.06 | 13 |
| Finland | 6.4% | 2.9% | 2.24 | 12 |
| France | 6.9% | 1.9% | 3.71 | 7 |
| Germany | 4.6% | 1.8% | 2.51 | 10 |
| Greece | 9.0% | 0.4% | 23.36 | 2 |
| Ireland | 22.8% | –1.4% | (15.86) | 1 |
| Italy | 3.1% | 1.3% | 2.51 | 11 |
| Luxembourg | 23.7% | 4.7% | 5.04 | 5 |
| Malta | 5.0% | 4.6% | 1.10 | 17 |
| Netherlands | 7.2% | 2.1% | 3.44 | 8 |
| Portugal | 9.3% | 0.9% | 10.48 | 3 |
| Slovak Republic | 10.4% | 3.8% | 2.72 | 9 |
| Slovenia | 11.9% | 3.1% | 3.78 | 6 |
| Spain | 10.5% | 1.8% | 5.80 | 4 |
Source: International Monetary Fund (IMF), CFA Institute.
As you can see, Ireland has the worst record given the negative growth expectation in their gross domestic product. Not surprisingly, among the other top nations are Greece, Portugal, and Spain, whose debts have grown more than five times faster than have their economies and have helped them to earn the unfortunate moniker of PIIGS (Portugal, Ireland, Italy, Greece, and Spain).
Projected Total Debt to Projected GDP 2012
| Greece | 189.1% |
| Italy | 121.4% |
| Ireland | 115.4% |
| Portugal | 111.8% |
| Belgium | 94.3% |
| France | 89.4% |
| Germany | 81.9% |
| Austria | 73.9% |
| Spain | 70.2% |
| Netherlands | 66.5% |
| Cyprus | 66.4% |
| Malta | 66.1% |
| Finland | 50.3% |
| Slovenia | 47.2% |
| Slovak Republic | 46.9% |
| Luxembourg | 21.5% |
| Estonia | 5.6% |
| Total | 90.0% |
Source: International Monetary Fund (IMF), CFA Institute.
The table above shows the projected total debt to projected 2012 gross domestic product for each of the member states of the eurozone. Interestingly, all but five of the seventeen members have total debt-to-GDP ratios that are in excess of the “convergence criteria” of 60% maximum outlined by the Maastricht Treaty. Granted, the Maastricht Treaty allows for these amounts to vary under extraordinary circumstances, which many would argue describes the current period.
Total projected debt for 2012 is €8,713.81 billion, as compared to total projected GDP of €9,686.82. Comparing those two figures results in a total projected debt to total projected GDP figure for the eurozone member states of 90.0% for 2012, or a full 50% above [(90% ÷ 60%) – 1] the limits set forth in the “convergence criteria.”
Furthermore, the total projected debt to total projected GDP for the five largest eurozone economies is 89.0%. In other words, the weight of the problem does not just rest with Greece but is evenly distributed throughout the eurozone.
2012 Debt Maturity to Projected 2012 GDP
| Austria | 7.8% |
| Belgium | 15.2% |
| Cyprus | 21.7% |
| Estonia | 0.0% |
| Finland | 7.3% |
| France | 12.1% |
| Germany | 10.4% |
| Greece | 20.6% |
| Ireland | 3.6% |
| Italy | 19.3% |
| Luxembourg | 0.7% |
| Malta | 11.0% |
| Netherlands | 8.9% |
| Portugal | 13.2% |
| Slovak Republic | 6.6% |
| Slovenia | 3.0% |
| Spain | 12.4% |
| Total | 12.5% |
Source: Bloomberg, International Monetary Fund, CFA Institute.
Next is a comparison of the scheduled 2012 total debt maturing for each eurozone member state compared to their projected 2012 gross domestic product. As you can see, both Greece and Italy need to refinance debt totaling approximately one-fifth of their projected GDPs. For the entire eurozone this number is equal to one-eighth of total projected 2012 GDP in debt that needs to be rolled over.
Debt Maturities, Percent of Total
| 2011 | 2012 | 2013 | |
| Austria | 0.1% | 9.3% | 9.0% |
| Belgium | 4.5% | 18.3% | 9.4% |
| Cyprus | 0.0% | 36.5% | 19.9% |
| Estonia | 0.0% | 0.0% | 0.0% |
| Finland | 0.0% | 18.5% | 7.9% |
| France | 4.1% | 18.8% | 9.6% |
| Germany | 3.7% | 21.7% | 14.8% |
| Greece | 2.4% | 12.9% | 8.0% |
| Ireland | 0.0% | 5.3% | 5.5% |
| Italy | 2.3% | 19.5% | 9.7% |
| Luxembourg | 0.4% | 5.1% | 49.5% |
| Malta | 2.0% | 18.6% | 12.6% |
| Netherlands | 5.6% | 18.1% | 10.1% |
| Portugal | 3.5% | 13.7% | 6.6% |
| Slovak Republic | 0.0% | 16.4% | 12.9% |
| Slovenia | 0.0% | 7.9% | 0.8% |
| Spain | 3.0% | 21.0% | 12.7% |
| Total | 3.1% | 18.6% | 10.7% |
| Running total | 3.1% | 21.8% | 32.5% |
Source: Bloomberg, CFA Institute.
Here are each eurozone member state’s percentage of debt maturities as compared to their total outstanding debt for the remainder of 2011, continuing through 2013. The top five largest economies in the eurozone also happen to have some of the largest debt rollover needs: Germany 21.7%; France 18.8%; Italy 19.5%; Spain 21.0%; and the Netherlands 18.1%.
For the entire eurozone, there is a need to roll over 21.8% of the total outstanding debt from now until the end of 2012. By the end of 2013 they will need to roll over almost one-third (i.e., 32.5%) of outstanding debts.
Deficit to GDP
| 2006 | 2007 | 2008 | 2009 | 2010 | |
| Austria | –1.6% | –0.9% | –0.9% | –4.1% | –4.4% |
| Belgium | 0.1% | –0.3% | –1.3% | –5.8% | –4.1% |
| Cyprus | –1.2% | 3.5% | 0.9% | –6.1% | –5.3% |
| Estonia | 2.4% | 2.4% | –2.9% | –2.0% | 0.2% |
| Finland | 4.0% | 5.3% | 4.3% | –2.5% | –2.5% |
| France | –2.3% | –2.7% | –3.3% | –7.5% | –7.1% |
| Germany | –1.6% | 0.2% | –0.1% | –3.2% | –4.3% |
| Greece | –5.7% | –6.5% | –9.8% | –15.8% | –10.6% |
| Ireland | 2.9% | 0.1% | –7.3% | –14.2% | –31.3% |
| Italy | –3.4% | –1.6% | –2.7% | –5.4% | –4.6% |
| Luxembourg | 1.4% | 3.7% | 3.0% | –0.9% | –1.1% |
| Malta | –2.8% | –2.4% | –4.6% | –3.7% | –3.6% |
| Netherlands | 0.5% | 0.2% | 0.5% | –5.6% | –5.1% |
| Portugal | –4.1% | –3.1% | –3.6% | –10.1% | –9.8% |
| Slovak Republic | –3.2% | –1.8% | –2.1% | –8.0% | –7.7% |
| Slovenia | –1.4% | 0.0% | –1.9% | –6.1% | –5.8% |
| Spain | 2.0% | 1.9% | –4.5% | –11.2% | –9.3% |
| Average | –0.8% | –0.1% | –2.1% | –6.6% | –6.8% |
| Weighted Avgerage | –1.4% | –0.7% | –2.1% | –6.4% | –6.3% |
Source: Eurostat, CFA Institute.
Eurostat tracks the historical budget deficits of each eurozone member state relative to each member’s gross domestic product. In 2010, the most recent year for which data are available from Eurostat, only the eurozone’s newest member, Estonia, ran a budget surplus (0.2%). Another way to look at the data is on a weighted average basis (weighted by GDP), which shows that budget deficits in the eurozone on average were 6.3% larger than GDP in 2010. Clearly this is an unsustainable result.
Guarantees to the EFSF
| Original (millions) |
Enlargement (millions) |
|
| Austria | €12,241.43 | €21,639.19 |
| Belgium | €15,292.18 | €27,031.99 |
| Cyprus | €863.09 | €1,525.68 |
| Estonia | — | €1,994.86 |
| Finland | €7,905.20 | €13,974.03 |
| France | €89,657.45 | €158,487.53 |
| Germany | €119,390.07 | €211,045.90 |
| Greece | €12,387.70 | €21,897.74 |
| Ireland | €7,002.40 | €12,378.15 |
| Italy | €78,784.72 | €139,267.81 |
| Luxembourg | €1,101.39 | €1,946.94 |
| Malta | €398.44 | €704.33 |
| Netherlands | €25,143.58 | €44,446.32 |
| Portugal | €11,035.38 | €19,507.26 |
| Slovak Republic | €4,371.54 | €7,727.57 |
| Slovenia | €2,072.92 | €3,664.30 |
| Spain | €52,352.51 | €92,543.56 |
| €440,000.00 | €779,783.16 |
Finally, each member of the eurozone has pledged contributions to the European Financial Stability Facility, initially on 9 May 2010 and in an agreement to enlarge the facility on 21 July 2011. The table above lists each member’s obligations to the EFSF. Interestingly, many of the troubled nations within the Eurozone are still pledged to provide bailout funding to the EFSF. If you remove the troubled nations (Greece, Ireland, Italy, Portugal, and Spain) from the total amount pledged, then you are left with €494.19 billion of EFSF capacity.
Originally published on CFA Institute’s Enterprising Investor.
