What a deficit on the trade balance looks like; WTO data from the GPS countries.

Last Thursday I had a chance to plug in at the database of the World Trade Organization (www.wto.org) .

I collected the import and export data of the GPS countries (Greece, Portugal and Spain) and I want to show these in order to demonstrate how much these countries have to do to become more competitive again. All data is of course courtesy of the World Trade Organization.

Greek exports and imports from 1990-2011
Data courtesy of : www.wto.org
Chart: ernstseconomyforyou.blogspot.com
Click to enlarge

If you look at the situation in Greece, it is clear that the Euro spurred imports to unbelievable levels in Greece, while the single currency didn’t do anything for Greek exports or competitiveness (rather the opposite). My comments in the chart are not meant to be negative about the Greeks, but rather to show how especially the North-West European countries (Germany, Belgium, Ireland and The Netherlands) profited from the fact that the Greeks could borrow money at much lower prices than before, while losing the competitive edge that having their own currency meant. Greece’s sorrow was Germany’s and Holland’s profits. Don’t forget that, as that is a true shame.

The main question over the last ten years has been: should Greece have entered the Euro or shouldn’t it. Looking at this chart, the answer is as obvious, as it is irrelevant now: it probably shouldn’t have done so. However, things are not black and white and I want to ask you not to look at it from a black and white point of view. Better think of the implications of a Europe of two speeds, where the richest countries did have and the poorer countries didn’t have a single currency. I still approve of the political choice to invite Greece, Spain and Portugal, in spite of the economic disadvantages it might now seem to have.

The most important question is now: what can Greece and the other EU countries do to make Greece competitive again. I hope that 2012 is the year that this question is finally answered, but I don’t have much confidence in it yet.

Spanish exports and imports from 1990-2011
Data courtesy of : www.wto.org
Chart: ernstseconomyforyou.blogspot.com
Click to enlarge

The same is true to a slightly lesser degree for Spain. Although Spanish exports also seemed to profit from the single currency, it were the imports that showed the real growth. In my opinion this is also a question of lacking economic competitiveness that needs to be solved by both Spain and the other EU-countries.

Last Thursday I spent so much time figuring out why the situation in Portugal deteriorated so much after 2006, that I didn’t have the time to publish a blog upon this data.

Portuguese exports and imports from 1990-2011
Data courtesy of : www.wto.org
Chart: ernstseconomyforyou.blogspot.com
Click to enlarge

To be frank, I still don’t know why this happened, but I do know that it happened and I invite my readers to share their knowledge with me about the Portuguese situation.

Tweet me a line or send a mail to the address that you can find in my profile page.

All in all, the situation of the GPS-countries during the last decade has been, that they clearly have been losing track to the North-Western Euro-countries, after the deployment of the single currency (no pun intended). Their lesser competitiveness and their difficult past until quite recently (the Seventies of the last century) made that these countries were not ready yet for the changes that the single currency brought.

Now it is time to help these countries finding their track again, instead of bashing them. This will be a helluva job for the whole EU, but it is not a job that the European citizens can run away from, if they want a stable future for the EU and all countries in it.