There’s a country in Europe with a large financial sector, big exposure to foreign trade, a floating exchange rate, and politics complicated by 4 communities within its governing structure.Â But enough about the United Kingdom.Â The latest statistical release from Eurostat covering GDP up to Q4 2008 is fascinating, not least because they also include the EFTA non-EU members, meaning Iceland, Switzerland, and Norway.Â A few things stand out.
First, if you were looking for a country that should have been hammered by the financial crisis, it would be one fitting the profile of our opening sentence but with the additional disadvantages of being outside the EU umbrella and being the whipping boy for the G20 complaints about tax and regulatory havens.Â Step forward Switzerland, which despite that baggage saw Q4 GDP just 0.3 percentage points down from Q3 or 0.1 percentage points down compared to Q4 2007.Â Â Given how disastrous Q4 was on average, that would be a decent performance even before taking account of Switzerland’s high vulnerabilty due to the previously mentioned factors.
Second: anyone want to guess which country among the EU + EFTA collection (with seasonally adjusted data) was the worst performing in Q4 last year compared to Q3?Â That would be Ireland.Â Even on an annual basis, only a couple of the Baltics turn in a worse performance, and they didn’t begin from as seemingly secure position as Ireland did.Â And the Irish crisis is at its core a fiscal crisis, which has still not been convincingly addressed.Â Just as well those G20 enhancements to the IMF lending capacity could cover a rich European country with cap in hand.
Finally, one other country deserves mention for keeping the show on the road in the face of predictions of gloom: Greece.Â Analysts look at the public debt numbers and think it can’t dodge a crisis.Â But it did dodge a recession in 2008, despite political chaos.Â Maybe there’s a Hellenic Tiger as well.
Message: politicians are in the business of pretending that the dire circumstances are due to events beyond their control.Â But even in a global crisis, there is significant country variation in impact.Â We need to spend more time looking at how an unlikely set of countries have coped relatively well.