Enlargement - economy and finance statistics
From Statistics Explained
- Data from November 2010, most recent data: Further Eurostat information, Main tables and Database.
This article provides a brief description of the main economic data in the candidate countries and potential candidates to the membership in the European Union (EU) and is based on the Pocketbook on the enlargement countries – 2011 edition. It provides details of two main components: national accounts and finance, focusing on indicators such as gross domestic product (GDP) growth rate, GDP per capita, gross value added and general government deficit and surplus, government debt relative to GDP, annual average inflation rate and foreign direct investment. It presents data for the enlargement countries and also for the EU aggregates.
Main statistical findings
The unprecedented financial crisis, which effect became clear in the autumn of 2008, has had a deep impact on the EU-27 and all enlargement countries. In 2009, the gross domestic product (GDP) decreased by 4.2 % in the EU-27. The extent of the damage resulting from the crisis in the enlargement countries varied depending on each country’s economic structure.
National accounts in enlargement countries
Gross domestic product
Croatia, Iceland, Serbia and Turkey, which are more integrated in the global market than the other enlargement countries, were heavily affected. Iceland was especially hit hard due to the collapse of the financial sector. In 2009, GDP fell by 6.8 % in Iceland, 5.8 % in Croatia, 4.7 % in Turkey and 3 % in Serbia. Montenegro, highly dependent on external financing, was also severely hit and saw its GDP reduced by 5.7 % in 2009. GDP decreased by 2.9 % in Bosnia and Herzegovina. Albania and the former Yugoslav Republic of Macedonia have been least affected by the crisis, as they are less dependent on exports and their domestic markets endured the recession well. Before the economic crisis, the enlargement countries recorded high economic growth rates: between 2005 and 2008, GDP growth rates in all of the enlargement countries exceeded that of the EU-27. The good performance of the economies of the enlargment countries prior to the crisis should be seen against the background of a booming global economy, easy access to international finance and ample liquidity.
In 2009, the GDP per inhabitant in Iceland, expressed in purchasing power standards (PPS), was 20 % above the EU-27 average. However, it was still 31 % above the EU-27 average in 2000. In contrast, GDP per capita in the other enlargement countries was well under the EU-27 average in 2009; nevertheless, it has been rising steadily in recent years. Croatia, Montenegro and Turkey registered GDP per capita between 30 % and 60 % below the EU-27 average, while Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia and Serbia were between 60 % and 80 % below the EU-27 average.
Gross value added (GVA) in enlargement countries’ economies
According to the latest data available, the service sector’s share in total gross value added (GVA) in all of the enlargement countries has been fairly high. Nevertheless, the EU-27 level of 74 % in 2009 was well above that of any of the enlargement countries, which recorded shares between 57 % and 70 %. An increase in the service sector registered over recent years compensated for the decline in the agriculture, forestry and fishing sector, and to some extent also for the decline in the industry sector. The only exception was Albania, where the share taken by the service sector fell between 2000 and 2008, though only by less than 2 percentage points, marking a 57 % share in 2007. The growth of the service sector between 2000 and 2008, on the other hand, was particularly visible in Serbia which recorded a rise of 12 percentage points. Compared to the EU-27, the economies of the enlargement countries generated a considerably higher proportion of GVA from the agriculture, forestry and fishing sector. In 2009, the EU-27 recorded a share of below 2 %, while according to the latest data available, values ranged from just over 6 % of total GVA in Croatia and Iceland, to almost 19 % in Albania. Generally, the agriculture sector’s share in total GVA declined by widely varying amounts in all of the enlargement countries over recent years. In the former Yugoslav Republic of Macedonia, it decreased only slightly, whereas in Serbia the share of this sector in the economy shrank by about half.
Finance in enlargement countries
Government deficit and debt
Under the terms of the EU’s Stability and growth pact, EU Member States have pledged to keep deficits and debt below certain limits: a Member State’s government deficit may not exceed 3 % of gross domestic product (GDP), while their government debt may not exceed 60 % of GDP. If a Member State exceeds these deficit margins, an excessive deficit procedure is triggered at EU level. It entails, among others, some steps to push the Member State concerned to take measures to rectify the situation. Keeping deficit and debt below certain limits is also one of the criteria for the economic and monetary union and hence for adopting the euro. The global economic downturn since 2008 has resulted in a sharp deterioration in public finances across Europe.
The general government deficit of the EU-27 widened sharply from the relatively low ratio of -0.9 % of GDP in 2007 to -6.8 % in 2009, more than twice the target reference value of -3.0 %. Apart from Iceland, all other enlargement countries recorded deficits below that of the EU-27 in 2009, ranging from -2.7 % in the former Yugoslav Republic of Macedonia to -6.7 % of GDP in Turkey. The particular exposure of Iceland’s banks to the global financial crisis in 2008 explains the country’s dramatic drop from a surplus of 5.4 % of GDP in 2007, to a deficit equivalent to -13.5 % of GDP in 2008. In 2009, the deficit was reduced to -9.1 %
General government debt across the EU-27, which remained between 58 % and 63 % of GDP in the period from 2000 to 2008, rose to 74 % of GDP in 2009, well above the target rate of 60 %. Iceland stood out among the enlargement countries: after recording general government debt levels ranging between 26 % and 36 % of GDP in the period 2000-2007, it increased to almost 88 % of GDP in 2009. The debt ratios in the other enlargement countries for which data were available, were below 60 % of GDP in recent years, although all registered a rise of public debt between 2008 and 2009.
Inflation rate in enlargement countries and the EU
Inflation, as measured by a consumer prices index, showed a very heterogeneous picture across the enlargement countries in the years between 2000 and 2005. In 2000, both Serbia and Turkey recorded very high inflation rates. They amounted to around 80 % and 53 % respectively, but fell sharply by 2005. The other enlargement countries (and also the EU-27), recorded inflation rates under 6 %, both in 2000 and 2005. In the period from 2006 to 2009, the EU-27 and the enlargement countries, with the exception of Albania and Iceland, experienced an inflation peak in 2008, ranging from 5.8 % (in Croatia) to 13.5 % (in Serbia) in the enlargment countries, compared to 3.7 % in the EU-27. In 2009, inflation slowed down, except in Albania and Iceland. Bosnia and Herzegovina and the former Yugoslav Republic of Macedonia even recorded a slight deflation in 2009, as consumer prices fell by almost 1 % compared to the previous year. In contrast, inflation considerably increased in Iceland and Albania, with 16.3 % and 3.5 % respectively.
Foreign direct investment
Foreign direct investment (FDI) inflows to the EU-27 increased by 70 %, from just over EUR 129 billion in 2005 to almost EUR 222 billion in 2009. Albania, Croatia, the former Yugoslav Republic of Macedonia, Kosovo, Montenegro and Serbia also experienced an increase of FDI inflows between 2005 and 2009, Albania recording by far the largest volumes: from EUR 209 million in 2005 to EUR 680 million in 2009. In contrast, Bosnia and Herzegovina, Iceland and Turkey saw a decrease of FDI inflows between 2005 and 2009. Iceland recorded a very high decrease, from almost EUR 2.5 billion in 2005 to EUR 64 million in 2009.
Economic indicators under national accounts and finances provide an overall picture of the economic situation and are widely used for economic analysis and forecasting, policy design and policy making. The demand for national accounts data in Europe has been gradually increasing. European countries have long shared a common cohesion policy which aims at increasing the convergence of European economies. A multilateral economic surveillance in the European Union was introduced with the Stability and growth pact of the Maastricht Treaty. Thus, official statistics on economy become key components of governance at national (for the monitoring of the economic and financial crisis, for instance), European (Europe 2020, EU Sustainable development strategy), and international level (e.g. Climate change, Education for all and Millennium development goals – MDG) as part of the public information available to all.
International cooperation in statistics has gradually become an integral part of broader development policies. Eurostat’s role in the enlargement policy is to support the European Commission’s Directorate-General for Enlargement in monitoring national statistical systems of the candidate countries and potential candidates. As well as for several statistical fields, it provides technical assistance in the production and dissemination of harmonised and high-quality data on national accounts and finances that conforms to European and international standards.
Data sources and availability
Data for a core set of indicators is collected each year through questionnaires sent out by Eurostat to the partner countries. A network of contacts in each country has been established for updating the questionnaires. Eurostat distributes the electronic questionnaires to a single contact point in each partner country. This contact point is in charge of the onward distribution of the questionnaires to the various thematic co-ordinators in each country's statistical system (generally within the national Statistical Offices) and of their collection afterwards. When completed, the validated and updated questionnaires are sent back to Eurostat. Data for Iceland were also extracted from Eurostat’s free dissemination database.
Further Eurostat information
- Pocketbook on the enlargement countries – 2011 edition
- European Neighbourhood Policy Countries – Overview of the recent economic developments - Leaflet
- Gross domestic product, Candidate countries and potential candidates (tgs00028)
- Economy and finance (cpc_ec)
- European Commission - Budget
- European Commission - Economic and Financial affairs - Stability and Growth Pact
- European Commission - Enlargement
- Other articles on the enlargement countries
- Background articles on international statistical cooperation
- National accounts - an overview
- ↑ This article is based on the pocketbook on the enlargement countries - edition 2011 when Croatia was not yet an acceding country and Serbia was not a candidate country. At present Croatia (HR) is an acceding country, to become a Member State of the European Union (EU) on 1 July 2013 and Serbia was granted candidate country status on 1 March 2012.