Monday, 9 July 2012

Is Iceland OK now? Economic figures comparison

I have been silent for a while here, apologies for that, as I'm on a vacation in France and working on the last draft of my PhD thesis on the sideline. Some exciting updates - from a nerdy point of view - coming up though and once the thesis is out of the way I'll get into proper research for the book I'm (supposedly) writing on the Icelandic economy.

Anyway, the hottest buzz on and about Iceland nowadays is that it's out of the recession.Gylfi Zoega, one of the foremost professors of economics at the University of Iceland, and a member of the monetary policy committee at the central bank of Iceland, said the recession was over. Krugman, who seems very fond of Iceland (come on over again and spend your dollars, we need them!) said that the country had broken all the rules, contrary to Ireland, "and things are not too bad."

Not too bad indeed: 4.2% GDP growth between 1Q12 and 1Q11. Iceland is back on track! How about "une petite coupe de champagne?"

Anyways, I've got my (usual) doubts and I've expressed them repeatedly (such as here, here and here). So as I was paging through the newest issue of The Economist I decided to use the figures at the back there to throw up this comparison of economic figures from all over the world.

Figures from the newest issue of The Economist. Iceland's figure are from Statistics Iceland or calculated by myself. The CA/GDP figures are estimates for 2012, same goes for the Budget Balance figures. In the case of Iceland, I use the total CA/GDP figures (-7.0%) but some want to exclude the old banks from those figures since they are in receivership. If skipped, the figure drops down to -0.1%. Click to enlarge.

This table can be fuzzy to read on its own to judge between the economic health of the economies in question. So I used the figures there to construct the following simple comparison table.

The following table does nothing but to give "points" to countries according to their relevant position to the other ones. As an example, the GDP growth in Greece is worst, so Greece gets 1 point for GDP growth. China is on the top, so they get 18 points for GDP growth. Likewise, only Iceland has worse current account deficit than Greece so the Mediterraneans get 2 points for that comparison. The total points of all the countries are then summed up in the right most column.

Looking at this table, Iceland's 4.2% GDP growth isn't so impressive any more. Like I said almost a month ago "well, yes, there is growth" but unfortunately, there seems to be not much  more. Iceland's "not too bad" economic performance is still pretty damn bad.

The comparative rankings of economic figures, using the data in the previous table. Norway wins (98 points) followed by Germany (82) and Sweden (80). Greece loses (23 points), Spain gets 29 points and Italy 34. Iceland is next (35 points).

The "economic points" of each nation (same data as in the table). Well done Iceland, you're in league with the best!

P.S. When are we going to start talking about the budget imbalances of Netherlands? Is 5.1% budget deficit just a-OK because Spain is rocking it at 6.5%?

(edit: 21:50) Initial calculations were wrong on the budget deficit comparison. That has now been corrected.


  1. Unemployment:
    Greece 2
    Iceland 6
    Sweden 9

    Guess Greece har unemployment round 25% (similar to Spain), know Iceland is about 6 to 7%, and Sweden 7 to 8%. (I am Icelandic and live in Sweden, so I think a know)

    So why do you rank unemployment in these countries the way you do?

  2. The Economist sticks 21.9% unemployment to Greece and 8.1% to Sweden. Statistics Iceland report a figure of 8.5% for Iceland (May).

    Only Spain is worse than Greece so Spain gets 1 point. Greece gets 2 points. The EZ is next (11.1%, 3 points) followed by France (10.4%, 4 points) and Italy (10.1%, 4 points). Iceland is next (8.5%, 6 points) and US and UK (8.2%, 7 points) are between Iceland and Sweden (8.1%, 9 points).

    So I cannot see that there is a flaw in the unemployment rankings. But there was one on the budget balance (it was flipped) and I saw it thanks to your comment. Cheers!