The race to economic recovery - January 6, 2011
In the race to recovery, countries are not at the same pace. In Europe, the hare, Germany. And the tortoise, Greece. France is in the forefront. The graphic above represents the race of nations towards growth before, during and after the crisis. The evolution of the economy of each country is measured by the annualized quarterly growth rate. Clearly, the level of economic activity in each quarter compared to the same period a year ago. The first quarter 2010 is reported in the first quarter of 2009.
The bubbles are inflated or deflated each country according to the weight of debt. As during the crisis, state revenues (taxes, etc.) fall and spend it (unemployment benefits, subsidies, etc.) rise, debt has continued to grow.
Some countries, like France, have fared better during the crisis through mechanisms nicknamed "automatic stabilizers" by economists. Specifically, the State spends more on leaner times more likely to compensate unemployed or collects less revenue because of tax cuts. This strategy has its downside: it widens the deficit, which are in turn inflate the debt.
Other economies have been affected more severely, as in Germany. While France has registered a fall of 2% of the wealth produced in 2009, activity in Germany plunged by 4%. But she rebounded with more vigor, flirting with the 3% annual growth in 2010.
Ireland finally knew stratospheric growth rates before the crisis.Then the economic downturn has hit hard, challenging in part because its business model based on such real estate and banks. These have dived with the proliferation of defaults on home loans. The state decided early in the crisis support to 100%, wiping losses in their places. Result, the debt has exploded, increasing from 44.4% in 2009 to 102% in 2012. The drastic austerity plan, quickly became inevitable, is stopping the resumption of growth by cutting.
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