October 30, 2006
Spain on the up, Italy on the down
Forgive me, if I indulge in a traditional journalist’s device - namely drawing sweeping conclusions from passing through an airport. But it is hard not to be impressed when you land in Madrid, as I did on Tuesday. The new terminal at Barajas airport opened in February and was awarded the prestigious Sterling architecture prize on October 15th. Its spaciousness, beauty and unhurried feel are particularly striking for anyone who has just arrived from the hell-hole that is Heathrow.
But the contrast that most impresses me is not between Britain and Spain, but between the relative fortunes of Spain and Italy. Madrid’s new airport is a symbol of the confidence and growing prosperity of the country. By comparison, the run-down airport and infrastructure of Rome seem to reflect Italy’s sagging spirits.
The Spanish tell me that within two years, they expect Spain’s GDP-per-capita (measured in purchasing-power-parity) to overtake that of Italy. At the moment Spain’s GDP-per-capita is 98.2 per cent of the EU average, while Italy’s is 100.5 per cent. But Spain grew at 3.5 per cent last year and is expected to rack up 3.1 per cent growth this year. By contrast Italy registered 0 per cent growth last year and is expected to grow by 1.3 per cent this year. Last week Italian government debt was downgraded. Italy’s debt-to-GDP ratio stands at a frightening 106.6 per cent; compare that with Spain’s 43.1 per cent. The Spanish government is running budget surpluses, Italy is struggling with persistent deficits.
It will be a deeply symbolic moment in both countries, if and when it is announced that the average Spaniard is richer than the average Italian. The Italians have always looked down on the Spanish a little bit. (Much as the French have always looked down on the Italians). Italy is a member of the G8; Spain is not. Italy was a leading industrial democracy, when Spain was struck in Francoist isolation. Tourism in Italy was associated with high culture, while Spain had sun, sea and sangria. But these days it is Spain which is growing fastest and which is exhibiting a new cultural confidence. The Spanish film director Pedro Almodovar is globally celebrated - much as the Italian director, Fellini, was in the 1960s and 1970s. It is Spain that is full of exciting new architecture from Madrid airport to the Guggenheim in Bilbao.
What accounts for the difference between Spanish and Italian fortunes? A blog entry is perhaps not the place to attempt a full-scale analysis. But three things strike me. First, Spain has had very few governments compared to Italy’s fragile and revolving coalition. The Spanish governments of Gonzalez, Aznar and now Zapatero have had time to put sound policies in place and see them through to fruition. Second, the Spanish welfare state is much less generous than Italy’s - and organised labour is weaker, as is the extreme left. Finally, the magic ingredient - confidence. Spain has bags of it at the moment. Italy seems gloomy and fearful by contrast.
You forgot to mention that Italy´s GDP accounts for black economy (about 15-20% of total GDP)while Spain doesn´t. It means that, in fact, spaniards are probably richer than italians already¡
Posted by: Jose | December 5th, 2006 at 4:30 pm | Report this commentYes we are richer already no doubt. Even not taking into account black economy, Spain has already catch up on Italy in 2007 and is forcasted to overtake Italy in 2008. If we account for black economy too as Italy does, surely we are already richer.
Posted by: Pablo | May 11th, 2007 at 1:30 pm | Report this commentItaly is a Spagetti country: Corrupt politicians, corrupt society, extremely bureaucratic, chaotic and disorganised people. Italy is not a serious country and deserves to be surpassed by Spain. I think Spain should be on a pair with France in the near future.
Posted by: Tommy | May 28th, 2007 at 3:37 pm | Report this commentWe can reach the conclusion that Spain level of life is already higher than Italy´s not just because our Public Debt is 43% of our GDP while Italy´s Public Debt is over 106% or because Spain´s GDP doesn´t include the underground economy (as Italy does) but from other statistics: Spain overtook Italy about five years ago in consumer electronics per capita; Spain overtook Italy in energy consumption per capita more than five years ago; Spain overtook Italy in percentage of people with higher education over five years ago…
Posted by: Enrique | May 29th, 2007 at 2:48 am | Report this commentAnd Spain´s GDP growth in 2006 was finally 3.9% and this year it is expected to be 3.4%.
Posted by: Enrique | May 29th, 2007 at 5:50 am | Report this commentWe have to invest on R&D(i+d) if we wana keep breaking thru.
Posted by: Spaniard | May 30th, 2007 at 5:56 pm | Report this commentWell, we have the money to invest on I+D+i. At least we have a wealthy state!. On the other hand the italian State is on vitual bankrupcy.
Posted by: Federico | May 31st, 2007 at 4:45 pm | Report this commentMuch of the Spanish Renaissance has been based on housing and construction. With interest rates rising globally, Spain will surely feel the effects and it will put a damper on future growth.
Secondly, Spain has benefited immensely from joining the European Union. Eventually, it will have to give back to help out eastern europe, in much the same way the original 6 did with the “Club Med” countries of Southern Europe. In other words, Spain will no longer be subsidized by the Union.
All the comments here are mostly observations with not much empirical data. It is extremely difficult to measure wealth and overall living standards. In the Economist’s Standard of Living Index, Italy ranked 7th in the world and ahead of Spain. Italians also buy more big ticket items, like automobiles and, they live longer too. Italy’s GDP per hour worked is still way ahead of Spain’s and among the highest in the world.
Again, I’m not saying this means Italians are richer. I’m just pointing out that the evidence isn’t at all clear-cut.
Posted by: salvo007 | June 12th, 2007 at 5:20 pm | Report this comment“Much of the Spanish Renaissance has been based on housing and construction”: Not true. The spanish renaissance has more to do with sound economic policy and market privatization & deregulation following the northamerican and british model. We have been growing at an average of about 4% from more than a decade. That cant be explained by the construction boom solely.
“Secondly, Spain has benefited immensely from joining the European Union”. Well, we invested the money extremely wisely. Remember that Spain never benefited from the Marshall Plan while Italy did. Also Spain joined the EU in 1985, while Italy benefited from joining in 1958 much more than Spain: almost 30 years more in fact!.Remember also that Spain was politically and economically isolated by the rest of Europe during 40 years, while Italy benefited from being treated politically by the USA as if they had won the war when they in fact lost it!. On the other hand Italy is a perfect wasting machine : most of the european funds are used to cover the state deficit holes or end in the mafia hands!
“All the comments here are mostly observations with not much empirical data”. If you want empiric data there are lots of it to supply: The EU has announced 1 month ago that Spain was on the verge of surpassing the Italian GDP per capita pps. You can also consult the Eurostat forecasts for 2008 on the official web page: Italy= 25.900 euro (GDP per capita pps) Spain = 26.200 euro (GDP per capita pps). But if you take into account that Italy accounts for their black economy(30% GDP) while Spain not(25% GDP) we can easily say that Spain is already richer than Italy no doubt. So my friend the evidence is clear-cut: Spain is richer than Italy wether you like it or not.
I’m fed up with these italians that believe that Italy is still the center of the world. For some time now I have been looking at the remarkable developments in Spain. Both economically and socially. And what strikes me most are the reactions from especially the italian side. The fact that they put so much effort in talking Spain down just says enough.
Posted by: Anthony | June 19th, 2007 at 1:24 pm | Report this commenttranquillo tranquillo. My comments are not putting down Spain at all. I am just saying it is not clear cut. The fact that we can both point out evidence to support both countries demonstrates that it is not black and white.
Posted by: Anonymous | June 21st, 2007 at 12:50 pm | Report this commentNo one is taking down Spain.
Salvo 007: you are italian no doubt and thats clear enough not only by your comments but by your nick. You continue to say that its not clear cut. You must be really stubborn as I have provided enough “empirical” information to you to sustain that Spain is already richer than Italy. Sorry but you didnt provide any evidence at all!. We are talking about richness and richness is measured as GNP per capita pps. FINAL!.We are not talking about how many automobiles are manufactured here or there or if people live more in Italy or in Spain… Besides there are official informations you could consult elsewhere on the net.I understand that you italians dont feel very confortable with the very new situation, as Spain not only is richer but it counts more than Italy in the political arena although we are not members of G8. Well every country has what it deserves to. You will have to change your chip as Spain is doomed to become as powerful as France in the near future.We are no more “il povero cugino” my friend.
Posted by: Anthony | June 21st, 2007 at 2:13 pm | Report this commentLook at all the assumptions you are making about ME now. Please lets not allow a 5-digit number to have so much power. And please don’t allow it to become a catalyst for making rude remarks.
‘
I don’t have to change my “chip” because I wasn’t even born in Italy. I was born in the greatest nation on earth.
This has been an eduction for me I must say. I had no idea Europeans were so bent out of shape about a 5-digit number. LOL
Posted by: salvo | June 21st, 2007 at 6:23 pm | Report this comment“I was born in the greatest nation on earth” ho,ho,ho,congratulations humble boy!. Only a northamerican could be so pretemptious and far away from the objectivity no doubt!.You only have to talk about your country with any western european to come back to reality again or may be you should first talk to canadians and mexicans that are closer(not to mention countries in Asia, northafrica and middle east).Another Universe is possible!LOL!
Posted by: Anthony | June 22nd, 2007 at 9:03 am | Report this commentis pretemptious a word?
Posted by: salvo | June 22nd, 2007 at 5:18 pm | Report this commentEh is WOP a word? lol
Posted by: salvoIsGay | July 15th, 2007 at 12:32 pm | Report this commentSpain has evolved and progressed impressively … probably both Spain and Italy enjoy similar levels of income per head. But we (Spaniards) still have a long way to cover if we want to be among the leaders of the EU economically, commercially and politically. We have to avoid empty triumphalism, or we will lapse into the Italian errors (true. they like to think that they are the center of the world, and look where they are heading for …)
Posted by: Pedro Perez | July 23rd, 2007 at 12:56 pm | Report this commentItalians are very jealous of spaniards because of what they call “Il Sorpasso”, thats it, Spain overtaking Italy in so many fronts . Italians tend to think that Italy is the best country in the world, where the people best enjoy life, etc. I think they have been taking too many siestas while spaniards worked hard so they are becoming a poorer and less important country and Spain is clearly surpassing Italy. Spanish companies aquired some important british companies, like Telefonica aquiring mobile operator O2,British Airports Authority (BAA) by Ferrovial, Scottish Power by Iberdrola. Spain is the eight worldwide investor, overtaking Italy also in this front.
Posted by: John | November 8th, 2007 at 4:20 pm | Report this commentItalians are very jealous of spaniards because of what they call “Il Sorpasso”, thats it, Spain overtaking Italy in so many fronts . Italians tend to think that Italy is the best country in the world, where the people best enjoy life, etc. I think they have been taking too many siestas while spaniards worked hard so they are becoming a poorer and less important country and Spain is clearly surpassing Italy. Spanish companies aquired some important british companies, like Telefonica aquiring mobile operator O2,British Airports Authority (BAA) by Ferrovial, Scottish Power by Iberdrola. Spain is the eight worldwide investor, overtaking Italy also in this front.
Posted by: John | November 8th, 2007 at 4:21 pm | Report this commentItaly combines European sophistication with relaxed Mediterranean warmth and hospitality - it might well be the best country in the world, as the Italians believe.
For me, the quintessential Italian is that paragon of wisdom, tolerance and humanity - Primo Levi.
Posted by: RCS | November 8th, 2007 at 5:08 pm | Report this commentehehehehehh…
2006 Nominal GDP ranking by International Monetary Fund (Gross Domestic Product, that’s the primary G8 parameter and real economy size index):
Italy: 1,852,585 millions of USD
Spain: 1,225,750 millions of USD
2007 GDP (PPP) by International Monetary Fund (Gross Domestic Product at Purchasing Power Parity , that isn’t a G8 parameter and strongly depends by countries demography):
Italy: 32,319 USD
Spain: 29,148 USD
Spain in 2009 could overtake italy in per capita GDP (as many other counties like Ireland, Iceland Austria or Greece have already done!): it’s normal for a modern and healthy economy with a moderate demography! But spanish GDP is 66% of the italian (as well as the spanish demography is 75% of the italian). Hardly Spain could overtake Italy in nominal GDP also because hasn’t the industrial substrate (characterized by thousands of small and medium enterprises) that Italy developed during the past 50 years.
Posted by: Galileum | November 11th, 2007 at 10:13 pm | Report this commentHowever, I don’t understand the anxiety of Spaniards to be better than us; or maybe I understand: It’s the same anxiety, for us Italians, to be the better than French!!!
Salute fratelli spagnoli!
Yes, Galileum, but we don´t take into account the underground economy, hehe.
Of course i don´t think Spain´s GDP will surpass Italy neither in 10 nor in 20 years…but it is possible in three years we can overtake Italy´s income per head (even if we don´t include the underground economy)
Spain´s energy consumtion per head (3,4Kw)already surpassed Italy´s (3KW) three years ago, even if it is true Italy still has more cars per capita than either Spain or France (Spain surpassed France last year)
Posted by: Enrique | November 11th, 2007 at 10:49 pm | Report this commentehm… so you think that International Monetary Fund, World Bank, C.I.A, Eurostat and “Sec95″ institute provide economic data in favor of Italy more than of Spain?
Posted by: Galileum | November 12th, 2007 at 1:56 am | Report this commentItaly has a great underground economy (greater then Spain, belive me) and if it could emerge, Italy would be the fourth (and not the seventh) world economic power!
Of course, Spain will overtake italian per capita GPD in next 3/4 years but, I repeat, It’s depends by many complex factors (First of all the DEMOGRAPHY). Of course, spanish “per head” energy, cars or consumer goods consumption is more than in Italy or in France. Good! It’s good for Italy and other european country that Manufacturing these products (spain hasn’t heavy or Hi-Tech industries).
Italy, for all the “corrupted” economic institutes, is the seventh country by nominal GDP, but only the 24th by per capita GDP; even Greece, with her irrelevant nominal GDP is over this rank: why not Spain? The opposite would be strange!!!
Finally Spain became a modern and rich european country (after decades of fascist regime): be happy! You want to feel that, soon, spaniards have more money, in their pockets, of Italians? OK! 24 countries have yet this “honor”! We remain, however, the seventh largest economy; you can not easily overtake in it!
However, I repeat yet, I don’t understand the meaning of this competition. Soon countries like China india or Brasil overtake all us and Europe will need to become a single economic entity if would survive!
Agreed Galileum,
After all Spain is just 9% of the EU´s population, Italy is 11%, France 12% and Germany 16%…
The EUROZONE has 312 million people and a GDP of 10 Tr. euros.
On Eurasian terms Europe´s 490 million people means just half India´s and a third of China´s…not much.
Just the state of Uttar Pradesh has a population of 186 million people, similar to Brazil and as much as Germany, France and Spain combined…
On economic terms thanks to the EURO the Eurozone is the second economic block of the World but we could be the first one if the UK joins the Eurozone (that would mean also the integration of Sweden and Denmark) With a GDP that on current USD would be almost 20% larger than the American, the European Union could be the HUB of World Capital….
But, of course, Americans don´t accept and will not accept losing the priviledge of being the HUB, so they will make anything possible (open threats to Blair and Brown by the US Administration, media threats by the American citizen Murdoch…) to avoid the UK joining the EUROZONE.
Martin Fieldtein in TIME and Henry Kissinger in DIPLOMACY advised us that the US will not accept losing their economic primacy.
We are just slaves. Bantz Craddock, Supreme Commander of SACEUR is our Viceroy.
Posted by: Enrique | November 12th, 2007 at 2:18 am | Report this commentAbsolutely agree, excellent explanation.
Especially we latins must combine forces to combat the political and echonomic chaoss that I expect over the next 50/60 years.
It is not time to “wars between poor”
Ciao
P.S. Join ever UK Eurozone? mmmmhhh…
Posted by: Galileum | November 12th, 2007 at 2:40 am | Report this commentGalileum. You have your numbers mistaken. Just use Eurostat statistics. They’re much more reliable and all european countries are guided by them. We have in Europe our own statistics institute so we dont need to rely on FMI or World Bank, or CIA, besides their stats sometimes are not well constructed or not suited to european needs.
http://epp.eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR_2007/PGE_CAT_PREREL_YEAR_2007_MONTH_06/2-28062007-EN-AP.PDF
http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-BJ-07-009/EN/KS-BJ-07-009-EN.PDF
See section 3.1 Output.
Spanish forecasted per capita income ppp 2008= 26.600 euros. Italian forecasted per capita income ppp 2008= 26.400 euros
Taking into account EUROSTAT statistics Italy is only 2% richer than Spain on ppp basis(EU27=100, Spain=102, Italy=104). Just take into account GDP growth forecasts (Spain 3,8% 2007 & 2,6% 2008, Italy 1,7% 2007 & 1,4% 2008) and you will quite easly come to the only possible conclusion: Spain will catch on Italy as early as in 2007, and will surpass Italy in GDP ppp in 2008.
If we take into account “Il sommerso”, that’s it the underground economy, Spain surely has already surpassed Italy as if Italy’s underground economy is about 30% GDP, Spain’s is about 26% GDP, so quite big and simmilar also.
With respect to competition between both countries is very significative that you italians are always trying to demonstrate that “Il sorpasso” or the overtaking of Italy by Spainis inexistent.You are too much pride of yourself I think. Sorry guys, but Spain is very quickly surpassing Italy in many fronts to despise the fact that Spain is becoming a richer and politically stronger country than Italy. Dont forget also we have an international projection (Latin America) that Italy lacks and spanish language is by far much more worldwide spoken.
Posted by: Ricardo soriano | November 12th, 2007 at 6:37 pm | Report this comment…maybe my english is not enough clear or I can’t explain this concept well;
Posted by: Galileum | November 12th, 2007 at 10:25 pm | Report this commentI try to be more clear:
1)Spain will overtake Italy in per capita GDP (PPP) in the next 3/4 years, at current growth rate.
2)Italy still remains the seventh economic power.
3)Spanish demography is 75% of the Italy: in these conditions it’s unlikely an overtaking of our “nominal” GDP.
3)Italy has a similar underground economy than Spain.
4)”Underground economy” it’s an “ethereal” and subjective concept (for this reason it’s irrelevant in GDP calculation)
5)Spain is, today, a rich country (like Italy, by per capita parameters) but not an economical power.
6)Never Spain will be “politically stronger” than Italy or other economical power until reamin out of G8 (unfortunately: I hate this sistem!).
7)BOTH ITALIAN AND SPANISH ECONOMY WILL BE SOON DESTROYED BY AGGRESSIVENESS OF EMERGING PAN-ASIATIC ECONOMIES!!!
Spaniards are living the exciting moment that italian liven during ‘80, when we was sure overtaking even UK economy (absurd!). But those were other times, we could even dream. Today Italy preserves a moderate heavy industry but almost totally lost her Hi-Tech manufacture (Transferred it to americans or, worse, asians companies). “Olivetti”, one of greater computer producer in the world during ‘70 ond ‘80, is a landmark case: today DESTROYED, expecially by asian low cost electronics manufacturing. AND THIS IS AN EUROPEAN MATTER!
If you want to waste time dreaming “sorpasso” to Italy (and I still don’t understand why so much resentment towards italians) do it. A very intelligent person like ENRIQUE (a Spaniard) understood my concerns: read his last post, you might learn something…
Gallileum. I detect some kind of anger on you. Please dont get annoyed and try to argue instead..We spaniars haven’t got any kind of resentment against Italy but whenever we talk about the inevitable “sorpasso” you italians get greatly annoyed. ¿Why? Evidently you hate being surpassed specially by us and are greatly scared about you losing power in Europe and specially in the mediterranean area .
Let me reply you:
1) Spain will overtake Italy in GDP ppp THE NEXT YEAR at curent growth rate as all European forecasts show. You evidently didnt read my link to Eurostats. In this last 2007 quarter we are already catching on Italy. Some spanish newspapers are commenting on this subject already.
2) Spain remains 8th economic power.
3) Nobody talked about overtaking Italy on a nominal GDP basis. We are 44 million inhabitants while you are 58.
With respect to underground economy I am happy you finally realized that our “sommerso” is quite relevant too.
4) Here I cant understand why you say underground economy is an irrelevant concept for GDP calculation. Sorry but I should repeat you that ITALY ACCOUNTS FOR BLACK ECONOMY (BY MEANS OF ESTIMATION) WHILE SPAIN DOES NOT. I it very easy to demonstrate that this is so. You only have to consult ISTAT.
“……Eppure più di un osservatore è convinto che nel 2009 la Spagna potrebbe superare l’Italia per P.I.L. pro capite. LA SPAGNA FRA L’ALTRO NON TIENE IN CONSIDERAZIONE “L’ECONOMIA SOMMERSA” NEL CONTEGGIO DEL P.I.L., MENTRE L’ITALIA LA CONTEGGIA. Già oggi l’economia spagnola è paragonabile, per dimensione, a quella del Canada, membro come l’Italia del G 8.
Altro punto di forza della Spagna è l’apertura internazionale verso i paesi di lingua spagnola, soprattutto l’America Latina, dove le banche iberiche risultano in assoluto come protagoniste dello sviluppo economico.
In conclusione: anche se le previsioni congiunturali puntano verso un rallentamento della crescita, questo nel medio periodo potrebbe diventare un consolidamento dell’economia spagnola, offrendo alla Spagna l’opportunità di rientrare fra le grandi potenze economiche e politiche del XXI secolo.”
http://www.unicredit-capitalia.eu/it/Capitalia/Ricerche/Allegati/Schede_Paese_Spagna_Dicembre_2006.pdf
5) I can’t quite understand why you say that Spain is not an economical power. I detect some jealousy on you: Spain is in fact the 8th economical power. Read again the last paragraph written by your own countrymen: “…offrendo alla Spagna l’opportunità di rientrare fra le GRANDI POTENZE ECONOMICHE E POLITICHE DEL XXI SECOLO.”
6) Now this is quite ingenuous even candourous of you when you say that Spain will never be politically stronger than Italy only because we are not members of G8. I again detect some strong jealousy on you. Please don’t make me laugh!. Everybody knows why and how Italy entered G8 (it has a lot to do with “sommerso” too!) and besides this G8 is a forum that lost his relevance long time ago!.Is a thing of the past being the outcome of the post WWII political balance. Present world has changed a lot!: China, India, Mexico, Soth Corea, etc should be now also considered. I can understand the overexaggerated importance you give to G8 as is the only kind of “distintion” that Italy holds. I in fact state that Spain IS ALREADY POLITICALLY STRONGER THAN ITALY whether in or out of G8 (Just remember inexistent Berlusconi’s Italy vs outstanding Aznars’s), and the fact that if Spain is not a G8 member is because nobody wants to throw out Canada and USA finds there are yet too many european countries in it so they are not vouching for Spain.
7) Italy’s industry is too much manufacture-based, very little technological and very little competitive and is greatly suffering the pain of asian competitiveness much more than Spain. So expect Italy to sufer much more than Spain, as Spain had to reconvert all his manufature industry on the eighties while Italy still lucks this reestructuration. No Italian government dared to cope with it to date.
And last but not least dear Gallileum, we are not wasting our time dreaming “sorpasso” to Italy, mainly because IT IS NOT A DREAM AT ALL!. IT IS QUITE REAL!. You italians are the ones dreaming of past grandeur: Imperial Rome dissapeard long time ago but you italians seem not to be aware of it. Present Italy is a very different country to that of the sixties, seventies or eighties. Just awake from your long dream Gallileum, and you will clearly see that Spain is catching and surpassing Italy in so many fronts…. whether you like it or not.
Posted by: Ricardo soriano | November 13th, 2007 at 9:56 am | Report this commentSorry, when I say Spain will overtake Italy in GDP ppp I of course mean “GDP PER CAPITA PPP”.
The “sorpasso” is easy to estimate. See that if EU27(2006)=100, then:
Spain GDP per capita ppp(2006)=102
Italy GDP per capita ppp (2006)=104.
These are real Eurostats figures for the year 2006. Now Spanish GDP is expected to grow 3,8% on 2007 while Italy’s is expected to grow 1,7% on 2007. If we dont consider the effect of population increase as it is too difficult to estimate and considering the european average constant, as this is a relative comparison we have:
Spain GDP per capita ppp (2007)=105,9
Italy GDP per capita ppp (2007)=105,8
Et voilà Spain catching on Italy as early as 2007!!!
Now Spanish GDP is expected to grow 3% on 2008 while Italy’s is expected to grow 1,4% on 2008. Again applying this data we have:
Spain GDP per capita ppp (2008)=109
Italy GDP per capita ppp (2008)=107
Et voilà Spain surpassing Italy on per capita income as early as 2008!!!
And the gap is expected to continue widening as Spain is expected to grow around 2,6% in the following years while Italy is expected to grow around 1,4%. And what is more: we are not taking into account black economy, while Italy does!!. Now you can say the “sorpasso” is a spanish dream but for you italians is more like a fearfull nightdream!
Posted by: Ricardo soriano | November 13th, 2007 at 11:22 am | Report this commentRicardo,
I don´t think there is any anger in Galileum. You misunderstand him. He has said rightly that Spain is on the verge of surpassing Italy in terms of income per head (of course if we take into account, as i pointed out, energy consumtion per head and the underground economy Spain´s income per head already surpassed Italy three years ago) but he reminds us that on the broad World stage we are just part of the same boat (European Union) and we are facing the competence of an emerging China in the Eurasian landmass without being economically integrated enough.
It is evident Spain did a great job during the last 20 years participating in the development of Latinamerica´s infraestructure thanks to dozens of Spanish corporations.
After Benettom came Inditex. Santander made an incredible strategical game with RBS before and after ABN-Amro. Telefonica didn´t fall overburdened as British Telecom or France Telecom.
But now there is a new horizon of integration that we have to take into account and in this trend our Portuguese friends should also participate. Telefonica will probably merge (really an acquisition) of Telecom Italia, Endesa is being merged (really an acquisition) by Enel. Repsol-YPF will merge with ENI on equal terms if the portuguese GALP joins REPSOL….
But the main interests of SPAIN remain in the emerging markets of Latin America, above all in that BRIC nation called BRAZIL, a nation that already has reached 190 million people (as much as France, Italy and Great Britain combined), a market much more important for Spanish corporations than any in Europe as demonstrated by Santander, which sold Italy´s Antonoventa to consolidate as the third Bank in Brazil thanks to Banco Real.
Also the build up of IBERIA came from Latin America making Madrid-Barajas the main HUB for Europe-Latinamerican air travel and trsnport. That´s the origin of the impressive T-4 wing in Barajas, an infraestructure that no other nation in Western Europe (not of course Italy) can boast, and the reason why it is in the interest of Spain to keep Iberia Spanish (to avoid the hub being transfered to Paris or London)
And given the increasing importance of energy supply i doubt REPSOL will be subject of any acquisition by a foreign company (the Spanish society will not accept that) The only option would be a merger of equals (50/50)
Spain also has a 10% participation in the impressive A-380 with CASA as a member of EADS and AIRBUS company.
Posted by: Enrique | November 13th, 2007 at 11:38 am | Report this commentEnrique: Yo estoy absolutamente y al 100% de acuerdo en lo que dices, pero no es para nada incompatible con lo que digo yo. Si te fijas, el italiano escribe de mala fe (curiosamente como la gran mayoría de los italianos cuando se trata de este tema), intentando restar importancia o incluso negando los progresos de España: No les estamos superando, no somos una potencia económica, ellos sí tienen tejido industrial y nosotros no, jamás les superaremos políticamente, ¿?…etc, etc. Está claro que es una reacción defensiva por su parte. Lo que está debatiéndose aquí en el fondo es la hegemonía sobre el mediterráneo, que ellos orgullosamente creen que les pertenece por derecho histórico por la gracia de Julio Cesar o algo así.
And of course Spain is politically stronger than Italy: Italy has much less international influence than Spain. It has an influence in Europe, but quite similar to that of Spain and of couse behind that of France, Germany and Great Britain, that are in fact the ones truly ruling Europe. These three last countries play first division, while Italy and Spain are in the second european division both.
Spain has a great influence over all Latin America, but also in South Northamerica, North Africa, Fillipines and the middle east. Italy cant even dream of having such influence in the world and our language is spoken by almost 500 million people worldwide!!
And of course Greece is not richer than Spain!!. Greece is 89% the european average (see my links to Eurostats), so as Spain is 102%, this yields Spain being 13% richer than Greece. Not a huge difference but a bigger difference than that between Spain and Germany or France, for example…
Posted by: Ricardo soriano | November 13th, 2007 at 12:39 pm | Report this commentExcelent explanation Enriqe, as usual!
Posted by: Galileum | November 13th, 2007 at 1:13 pm | Report this commentI just tried to explain difference between “nominal” and “per capita” GDP: Spain is on the way of an overtake of italian “per capita” GDP (OF COURSE!); but Italian “nominal” GDP remain significantly greater (2.174.816 vs 1.524.903 by 2008 IMF estimate) than the Spain and, unfortunately, it is the the only important parameter, in global economy. And I say “unfortunately” because, with this logic, emerging economical monsters,(like china or india or Brasil, precisely) are becoming greater economy in the world while retaining impressive internal rates of poverty. At the expense of european “midde class” (spanish, italian or french, it can be) because these “monsters” have cheap labor class with huge profits. Belive me Ricardo: spain will suffer like Italy, and each other european country, this dangerous situation! Enrique cited Airbus consortium: what will happen, you think, when Chinese begin to build their own planes? Italy still produces its own cars: what will happen to italian and european manifacture when Chinese and Indians begin to build their own cars? Dear Ricardo is it our nightmare, not the gap that separates your pockets from our; there is not time for some nonsense!
However, I’d never known this aspect of Spaniards…
Fortunately, there are people like Enrique to give me confidence in Spain …
Ciao Ciao
This conversation is interesting and quite funny really.
Galileum - you are reasoning in economic theory dating back to the time of your namesake!!! There’s no doubt that the rise of emerging markets will overall be beneficial to existing economic powers. There will be some pain for some sectors - many more olivettis. (Frankly, Olivettis, Bull and Amstrad were dreadful machines…)
But still, it is already beneficial: Europe would already be heading for recession following the US problems if it wasn’t for emerging markets - now the IMF reckons the EU should muddle through - still painful but it used to be “the US has 3-4 bad quarters, continental Europe has 3-4 bad YEARS!!!”
In any case, I dont think it’s morally and ethically possible to defend the current “sharing” of the world’s weath! (with less than 1bn people enjoying over 90% of the world’s wealth - don’t have the exact number, plz provide if you do, but I believe the point is valid)
Some of your point also remind me of the attitude of too many of my fellow countrymen. The nationality of the owners of a business doesn’t matter to me at all. I’m not naive - of course there is a valid argument to protect some industries - say military, etc… but even if one worries about say a pharma company being acquired by foreigners a moving all factories abroad, one can still allow the foreigners’ purchase and fix covenants that guarantee a minimum local capacity.
Whether Heathrow is Spanish or British or owned by a SWF, it will still get a lot of public pressure if its service doesn’t improve. The Spaniards in this case thought they could do a better job than the Brits. (and paid over the odds for this - thx to a now defunct accounting quirk allowing Spanish firms to capitalise goodwill - that explains much of Spanish firms buying spree in 05-06) They probably underestimated the task at hands - but still good luck to them.
On the point about Iberia - Air France kept KLM’s hub in Amsterdam. They did change some of the filghts, but assuming they end up buying Iberia - I suspect they would keep Madrid as the hub but if they can load a daily flight from Paris to Rio (AF does it already) and get a premium for it, then why not? You seem to forget that what consumers want is the basis of the market economy. I’m sure if airlines spotted a profitable business in Aberdeen/Rio flights they’d start a direct flight!!! (which might actually happen with the recently discovered oil offshore Rio and Aberdeen’s expertise in the domain!)
Also, I followed your debate on GDP per capital and nominal GDP. But who cares what the nominal GDP is??? This is the sort of thing Wall Street gets excited about or CEO at big companies. Ok, so China is soon to overtake Japan as the 2nd largest economy in the world. But surely, your average EU citizen or Japanese is much better off that your average Chinese. I bet most Chinese would love to live in places like Singapore, Copenhagen or Luxembourg.
Good luck with the rest of your discussion.
Posted by: French_in_london | November 13th, 2007 at 2:29 pm | Report this commentFor the next years is important to point out that Spain´s Public Debt stood at 39% of GDP in 2006 and going down while Italy´s stood at 106% of GDP in 2006 and going up. Probably this year Spain will end with a Public Debt amounting to 37% of GDP (compared to over 46% for the UK and 66% for USA)while Italy´s will amount to 107%.
That´s important because it means even if the economy slows in 2008 Spain has space for several years of budget deficits which can keep our spending in infraestructures, and our increasing GDP etc…
Posted by: Enrique | November 13th, 2007 at 3:15 pm | Report this commentDear French_in_london I quite agree with you. I dont give a dime for nominal GDP!!. What matters is RICHNESS and this is measured by GDP PER CAPITA PPP. It doesn’t matter to me if Italy is a bigger economy than Spain as logically it has much more inhabitants than Spain (30% more) as Spain is a scarcely populated country by european standards. China is a huge country and that is the reason why China is the 4th economical power of the world, but a very poor one. So Spain indeed is a smaller economy than Italy but is becoming richer and that is what really counts, at least for the wealthness of the inhabitants!!
And yes, I agree with you that the typical economic italian speech is one oversaturated with protectionism and fear of competition from abroad. A lot of italians I have been talking to dont really understand the basis of economic liberalism as they argue critizising us that there are a lot of big companies in Spain that we dont really own or with stakeholders from abroad. This is really funny and gives a clear picture of some of the structural problems of Italy: A market very little liberalised, too much state driven, with little transparency and with too much companies suffering from lack of competitiveness and living from government subsidies.
You italians are also very worried about China. You are always talking about the dangers of China and other developping countries and you say “la Cina è vicina…”, as your too much manufature-based companies are suffering a lot from asian higher competitiveness. But let me tell you that this is not in fact the right attitude. If your companies are lacking competitiveness dont blame China my friend!, blame yourself instead and do the necessary arrangements to become more competitive instead of crying!. You see developping countries as a risk but indeed they are A BIG OPPORTUNITY for our products and services as many spanish companies like Telefonica de España for example have been demonstrating in Latin America and elsewhere.
Spain had to reestructurate all his manufacture industry in the 80’s and as a result all the uncompetitive companies dissapeared. We really manufactured quite a lot of things in Spain before but unfortunately some of them were not competitive enough. As a result our terciary now weights a lot in our economy and much than in the case of Italy, but our industry weights less. This reestructuration you never undertook it in Italy before. As a result you could expect a lot of small and medium manufactured-based companies disappearing in Italy. It is a pity but the market rules and you cannot go against market rules without having the pain soon or later.
Posted by: Ricardo soriano | November 13th, 2007 at 3:57 pm | Report this commentDifferences between “nominal” and “per capita” GDP exists and is relevant.
A simplification of this concept is (generally):
GDP (nominal)= C + I + E + G
where
C = Consumer Spending
I = Investment made by industry
E = Excess of Exports over Imports
G = Government Spending
If you want to calculate the economic power of a nation only in base on its GDP “per capita” Luxembourg should be the first world power and Norway the second!
A fair compromise would be a good balance between the two values: a great exemple, in this sense, is Canada. Canada, with a population of “only” 31,612,897 unities, boasts a nominal GDP of 1,269,096 millions of USD (IMF 2006) and a “per capita” GDP = 35,514 USD (IMF 2006): very impressive!
Posted by: Galileum | November 13th, 2007 at 4:55 pm | Report this commentCiao Ciao
Galillium the case of Canada is almost as impressive as the case of Spain: a country of only 44 million people with a GDP already almost as big as that of Italy and higher than that of Canada (G8 member) and with a GDP per capita even higher than that of Italy and not talking into account underground economy: A-M-A-Z-I-N-G!.Face it boy: Spain overtook Italy already.
Posted by: roonie | November 13th, 2007 at 5:47 pm | Report this commenteheheheh
Even if math convinces you, me stop here!
I didn’t realize there were so arrogant and unreasonable spaniards.
Summarizing:
canadian population = 31,612,897 unities (lower is better in this case)
canadian “nominal” GDP = 1,269,096 millions of USD (IMF 2006)
canadian “per capita” GDP = 35,514 USD (IMF 2006)
spanish population 45 million unities
spanish “nominal” GDP = 1,225,750 millions of USD (IMF 2006)
spanish “per capita” GDP = 27,914 USD (IMF 2006)
Oh my god! Canada is economically stronger than Spain!
Where is the arrogance of Canadians? You are too modest Canadians…
ah.. i forgot… they haven’t the fondamental your secret weapon: underground economy!
Ok, I believe you! I surrender to your supremacy! You are too strong for all us!
Other than French: the real “grandere” is Spanish!
Posted by: Galileum | November 13th, 2007 at 6:17 pm | Report this commentP.S. roonie
Posted by: Galileum | November 13th, 2007 at 6:30 pm | Report this commentspanish nominal GDP is 66% of the italian; can be considered [”…already almost as big as that of Italy…”]. Of coooourse…
Bye Bye….
underground economy was the secret weapon of Italy to enter G8 and continues to be to date: creative accountability. Very much italian.
Now you continue using your secret weapon, as you appear in all GDP statistics national and regional above other countries just because of your trickery.
Just add to that spanish GDP figure a 26% black economy and you will be very much surprised: Spanish GDP plus black economy is almost the same as italian GDP plus 30% black economy.
So a 44 million inhabitants country as rich and expected to be richer and with almost the same GDP that a country of 58 million inhabitants: A-M-A-Z-I-N-G.
Hey , italians, you havent been doing your homework!
Posted by: roonie | November 14th, 2007 at 8:32 am | Report this commentSpain and Canada are almost on a pair since 1992.Some years Spain overtakes Canada, some others is Canada that overtakes Spain.It depends also on the statistical organization you use.i.e. According to World Bank, GDP PPP 2006:
Spain 1,152,356 $m
Canada 1,140,445 $m
But if Spain added its ”black economy” (possibly 25-30% of GDP) it would come comfortably ahead of Canada and indeed catch on Italy.
So taking into account that Spain is overtaking Italy not only economically but even politically no doubt it deserved joining G8.
Posted by: william Laplace | November 14th, 2007 at 10:06 am | Report this commentGalileum: You are an Italian clown, Don Pagliaccio!.If you are showing something here is that you know very little about economics and that you are very scared about Spain surpassing Italy.
Im very pleased to see how much you envy us but you should be paying more attention to what Beppe Grillo has to say about the grim situation of Italy instead!
Posted by: Ricardo soriano | November 14th, 2007 at 10:56 am | Report this commentThe Italian government had in 1987 as one of its political objectives that Italy should join the group of the five big industrial nations.
As one of the remedies was it decided that the Italian GDP figure should be inflated upwards with nearby 20% due to a black economy component.
This figure was of course a result of work done by the statistical authorities in Italy (ISTAT). But why just now? Why not long time before? And how to explain that the final result showed that the Italian GDP was just slightly higher than the GDP of United Kingdom?
There are no clear answers to all these questions but it is clear that statistical offices sometimes can be involved in serious discussions with their governments about the role of statistics in political matters.
Posted by: A. Lewis B. | November 14th, 2007 at 4:26 pm | Report this commentYou cannot really trust what italians say about their GDP. It is greatly over-inflated with underground economy.They want to appear on regional and national statistics much richer than what they really are because of political interests.
This remembers me the present case of Greece that wants Eurostat office to have their GDP revised to include about 25% black economy in order to avoid european accountability restrictions.Eurostat of course said no to Greece, but then why was Italy allowed to do it?.
Italians have always been very tricky with the numbers. This they call it CREATIVILY you know. Mafia style accountability I prefer to call it. It is a country that lacks a lot of transparency (Remember Parmalat?).
They loved to boast overtaking artificially the UK on the 80’s but can’t stand having Spain overtaking them now…. hehehe.
Posted by: Boreal star | November 15th, 2007 at 11:01 am | Report this commentRe: Ricardo post 13 November Time 12.39. Look at ‘The Economist’ figures for Greece GDP and PPP per capita and compare with Spain. Greece is much richer than Spain in Both. Re Wikipedea and compare Greece and Spain, again Greece much richer. Re latest stats IMF and World Bank, again Greece much richer than Spain.
Posted by: JACK | November 16th, 2007 at 9:07 am | Report this commentGreece also has around 50% black economy the highest in EU, which is NOT allowed by Eurostat to take into account. If they were allowed to take into account then Greece would be as rich or even richer than Luxembourg.
Ricardo soriano, good estimation on pps per capita gdp for Spain and Italy in the forthcoming years. As Italy is growing well under the eu27 average while Spain is still growing well over it you could expect Italy becoming poorer by comparison and hence further approaching the gdp pps eu27 average while Spain performs just the contrary. So 2007 Eurostats could be something like Spain 103, Italy 103. So in 2008 you could have the 2006 situation reversed: Spain 104, Italy 102.On a permanent regime as Spain is also steadly reducing its growth and approaching eu27 growth average, you could expect by 2012 something like Spain 106, Italy 99: the situation of 2005 reversed and now Italy under the eu27 richness average!.Of couse without taking into consideration population or labour productivity.
Posted by: Marianne | November 16th, 2007 at 9:07 am | Report this commentJACK, Which figures are you referring to?, just provide a link please. If your source is wikipedia, please I remind you that this is not a reliable source for statistics. Refer instead to Eurostat. Greece is 89% the eu27 average no doubt while Spain is 102%.
Posted by: Marianne | November 16th, 2007 at 9:12 am | Report this commentJack,
Black economy in Greece to be 50%?. Absurd. No European country has such a huge underground economy.Italy is the country with the biggest black economy(27-30%) in Europe followed by Spain (25-30%).
Greece is expected to have 20-25% shadow economy. Please revise your sources…
Posted by: A.r.s. | November 16th, 2007 at 11:14 am | Report this commentHi Marianne. I looked into Eurostat and could not find any info for period 2006-2007. Any info available was 2004 and previously.
Posted by: JACK | November 16th, 2007 at 11:16 am | Report this commentHave you had a look at The Economist.com Country FACTSHEET. IMF and World Bank 2007?
Jack, The only available information is that referred to year 2006. As year 2007 has not already finished we will have to wait until 2008 to have these figures.
I provide you with the link to Eurostat with all relevant info:
http://epp.eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR_2007/PGE_CAT_PREREL_YEAR_2007_MONTH_06/2-28062007-EN-AP.PDF
http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-BJ-07-009/EN/KS-BJ-07-009-EN.PDF
We use Eurostat in Europe, so we dont need to rely on what FMI or WB or CIA have to say about us. Besides statistics from diferent organisations greatly vary depending on how they have been constructed and depending on this you could have very different results.
All european goverments and economists use Eurostats as the main source for economical data in Europe and is the best possible source for comparing european countries between them. So I dont need to know what others say. I only rely on Eurostat for comparing european countries.
Posted by: Marianne | November 16th, 2007 at 11:31 am | Report this commentSo well done Spain on a couple decades of catching up with the leading economies of Europe. The country’s economy has been very dynamic and the government did its part by mostly staying out of business’s way - except of course when it cames to utilities and telecom companies.
Now going forward I can see 3 options:
- Spain’s growth falls in line with EU big countries. Arguably the best outcome.
- Spain continues to outperform and given that Eurozone interest rates are set for the majority of the zone, ie for Germany & France, that means high inflation for Spain. To be fair, the government realised that and “imported” labour. (for those in denial, check out the Spanish immigration statistics. of course, the politicians would be loath to admit it as people are scared of immigration in general, but that has helped the economy immensely by relieving the wage pressure that was building up.
- Spain experiences a slowdown. I feel it’s the most likely scenario - its severity could vary. I think the Spaniards have been in denial about the property market for a couple years now. Just like as late a last summer analysts in the US were claiming the property market slowdown was restricted to subprime. Slowly people are realising that we’ll have a struggling US property market into 2009 - some pessimists say even until 2010-12. As for Spain, when you see the number of building that have been left unfinished for months. It’s quite scary. Of course, the growth has been tremendous - but that only makes a slowdown more likely and potentially more violent. If you look at the banks, like Santander and BBVA, a very large portion of their earnings comes from interest earned on property related lending. If you look at US banks, you realise that only a small write off (say 2-5% of assets) can cost such a large bank billions of Euros. Then you have the construction and real estate companies - many of them have a gearing ratio that doesn’t leave much margin for error.
Of course, the goverment has wisely build up budget surpluses and generally been good at managing the economy - which could come handy if any needs to help soften a slowdown comes along.
So we’ll see what happens but whether Spain or Italy is biggest is just irrelevant. Every country in the Eurozone has plenty of work to do on their economy - in different ways, but if you look at the FT’s ranking of finance ministers, you can see a lot needs to be addressed. For me, the priorities ought to work at making the Eurozone function more like one single economy and not many different countries because that would make policy making at the ECB much easier - and make us all richer.
Posted by: French_in_london | November 16th, 2007 at 1:04 pm | Report this commentFrench,
Don´t forget that Spain´s Public Debt was 39% of GDP in 2006 and this year The Economist expects Spain to have an 1.8% surplus…and if we add a 3.8% GDP growth our Public Debt will go down to under 37% this year…compare that to the 46% of the UK, the 68% of France or the 107% of Italy.
There is room for several years of budget deficits in Spain wich can offset an slowdown on private consumption…an alternative no other important economy of Western Europe or the US (Public Debt is over 65% in the US) can boast.
Posted by: Enrique | November 16th, 2007 at 1:22 pm | Report this commentSpain of course will slow down. In fact is already doing so but slowly approaching european growth average and hence not losing relative wealthness. Italy on the other side is expected to continue losing ground from a wealthness point of view with respect to Spain and Europe as a Whole.
Posted by: Ricardo Soriano | November 16th, 2007 at 6:17 pm | Report this commentSpain overtook Italy on a GDP per capita ppp basis two years ago and its GDP ppp with 44 mill. people is close to the italian with 58 mill. Is only a question of Spain accounting for its black economy as Italy does.
Posted by: Paco | November 26th, 2007 at 5:10 pm | Report this commentOf course Spain deserved joining G8 but now it is too late and too many european countries have already joined.
In 1987 Italy government decided they wanted to join the then called G5. As they are italian and hence very “imaginative” they decided to increase their GDP by a 20% black economy component with the very suspicious result of an italian GDP just slightly over that of Great Britain (only by chance you know!;-)).This is a clear example not only of lack of transparency but of inferiority complex too, as they thought they had to be tricky with the numbers in order to be admitted. As a result USA approved their admission only if
Canada was admitted too in order to balance the well known result with the outcome of G5 transformed into G7(with the admittance of Russia is now called G8).
Now if Spain adds its black economy as Italy does not only is well ahead of Canada on a GDP ppp basis but close to the Italian GDP ppp too and of course well ahead of the Italian GDP per capita ppp.
So italians when you compare spanish and italian OFFICIAL GDP figures so naïfvely I very much remind you that you are comparing apples with pears.Just take into account spanish black economy too and you will be then comparing apples with apples or pears with pears again.
Posted by: Paco | November 27th, 2007 at 9:16 am | Report this commentDear Italians and Spaniards,
This interesting thread is over a year old and I admire your stamina for keeping it going. I seems that your arguments will continue while India and China will overtake both Spain and Italy.
I am also amused that the Italians have not yet pointed out that have won 4 World Cups to none for Spain
Now carry on.
Best,
P
Posted by: Pacifist | November 27th, 2007 at 10:43 am | Report this commentDear Pacifist,
Yes you’re right. This thread is over a year old but fresh like the first day as it continues to be actuality. Zapatero’s bet was that Spain will officialy surpass Italy on GDP per capita ppp. Till that day arrives this thread is alive. Ah, and remember my friend that football is not the only existing sport out there. Basketball, tennis, voleyball, Formula 1, motorcycles,etc are also sports and there Spain is a worldwide Champion.We had to compensate for our football failure someway…
Posted by: Paco | November 27th, 2007 at 3:29 pm | Report this commentApart from the well known T4 terminal in Barajas (Madrid) or the Guggenheim Bilbao there are other great examples of recent Spanish development:
The first solar thermal power plant, an impressive 40 storeys high tower in Seville:
http://news.bbc.co.uk/1/hi/sci/tech/6616651.stm
The Cuatro Torres Business Area (CTBA), four skycrapers 226-260 metres high built in the Madrid Arena at the same time…something like that is not happening anywhere in the World, not even in Shangai or Dubai.
http://www.youtube.com/watch?v=Mxn2wwahoDK&feature=related
The fantasmagoric Torre Agbar in Barcelona, from Jean Nouvel, changing colors:
http://www.youtube.com/watch?v=VHbGmLfzRvY
City of Arts and Science in Valencia, third Spanish city:
http://www.youtube.com/watch?v=FjHscgT_fjk&feature=related
Posted by: Enrique Costas Mira | November 27th, 2007 at 4:51 pm | Report this commentNote that it takes place not just in the capital as in the UK (London) but all across Spain: Madrid, Barcelona, Valencia, Bilbao…
Posted by: Enrique | November 27th, 2007 at 4:55 pm | Report this commentPacifist, If you mean on a GDP ppp basis China and India not only overtook already both Spain and Italy, but Japan, Germany, UK and France too. If you mean on a GDP per capita ppp I dont think you or me would live so much to see that happening if it could ever happen. Richness is measured by GDP PER CAPITA ppp, not by GDP ppp.
Posted by: albert | November 27th, 2007 at 5:16 pm | Report this commentHi Albert,
You are absolutely correct that a rich economy is considered rich by virtue of the per capita GDP and not just GDP which, in the case of large, populous countries like China and India will be quite large.
However, you can be rich but irrelevant. For sure Spain and Italy are likely to remain ahead of India and China on a per capita basis for a long time indeed but the rapid growth of those two big economies will make them huge world powers that Spain and Italy will never be unless the EU really integrates into a cogent entity.
Best,
P
Posted by: Pacifist | November 27th, 2007 at 5:26 pm | Report this commentEnrique, I would be very much upset if mega architectonical projects like that of the four towers in Madrid didn’t take place elsewhere. If I am not wrong I think the city of Dubai exceeds that magnificence although based on petrodollars. Shanghai and may be other cities in south Asia could have similar projects. Of course I could be wrong!
Posted by: albert | November 27th, 2007 at 5:34 pm | Report this commentWhile UK atlantism remains intact EU will never integrate by the grace of northamerican economical and political interests! Besides the recent admission of eastern european countries or the possibility or Turkey joining EU is exclusively aimed at guaranteeing european economic growth (more consumers equals more products to sell and more money to earn). Unfortunately the EU is a club of merchandisers only worried with making business!.
Posted by: albert | November 27th, 2007 at 5:45 pm | Report this commentAlbert, of course in Dubai and Shangai there is probably more construction than Madrid, I just mean a Project like that with Four Towers being built at the same time doesn´t exist over there.
Posted by: Enrique | November 27th, 2007 at 8:11 pm | Report this commentYesterday the UN issued the brand new 2007-2008 Human Development Index report and Spain is number 13, just after EEUU, and before countries like Denmark, Austria, UK, Belgium, Luxemburg and Germany. By the way, this is another index in which we clearly overtake Italy, that was ahead of us last year and is now number 20 in the index, well behind us.
This index as you know is a better measurement of country development and quality of life than per capita income solely.
A link to the report:
http://hdr.undp.org/en/media/hdr_20072008_en_indicator_tables.pdf
Posted by: albert | November 28th, 2007 at 8:39 am | Report this commentAlbert have in mind that the report is built with data from year 2005 so it is reflecting the situation of two years ago. Nowadays possibly Spain is even better positioned than that but we will have to wait until 2009 to know.
Posted by: Ricardo Soriano | November 28th, 2007 at 12:41 pm | Report this commentRE http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/07/472&format=HTML&aged=0&language=EN&guiLanguage=en
Posted by: JACK | November 29th, 2007 at 8:55 am | Report this commentUp to date 19/11/2007 good reading GDP etc in EU.
Out of the EU 15, Portugal is the poorest, followed by Spain the second poorest and then Italy the third poorest. Some new members have already overtaken Spain and Portugal and closely catching up to Italy. Re above link.
Posted by: JACK | December 1st, 2007 at 9:51 am | Report this commentSorry to say JACK, but you havent got the slightest idea of what you are talking about. That link does not refer to GDP ppp. No new member has overtaken Spain already. Of course some have overtaken Portugal, as this country is much poorer than Spain.
Portugal is 75% of EU27 while Spain is 102%. Portugal has been overtaken by Malta, Czech Republic, Slovenia and Cyprus.Spain hasnt been surpassed by any eastern country, and only Cyprus is relatively close with 94% of EU27.
References to use and the only official ones are listed below:
http://epp.eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR_2007/PGE_CAT_PREREL_YEAR_2007_MONTH_06/2-28062007-EN-AP.PDF
http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-BJ-07-009/EN/KS-BJ-07-009-EN.PDF
Posted by: Marianne | December 2nd, 2007 at 8:55 am | Report this commentYour reference Marianne is over a year old 2006. The reference I quoted is up to Mid November 2007.
Posted by: JACK | December 3rd, 2007 at 8:44 am | Report this commentMine is 2 Nov 2007, with both 2007 and 2008 GDP and GDP per capita PPP forecasts. Spain (PPS per head 2008 forecast)=26.600. Italy(pps per head 2008 foreast)=26.400. No eastern country has already surpassed neither Italy nor Spain from a GDP Per capita PPP basis.
http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-BJ-07-010/EN/KS-BJ-07-010-EN.PDF
Regards
Posted by: Marianne | December 3rd, 2007 at 12:37 pm | Report this commentI am afraid that reality is stubborn. I have lived in Italy for a year and it is obvious that Southern Italy should be paired with countries like Hungary or Romania while rich and industrialized north of Italy is closer to Germany in economic terms. I have lived also in Southern Spain and economy and society are bustling. Just stating the parallelism bewtween italy’s South and Spain’s South is simply ignoring the reality.
As it is ignoring other facts: We do have a broader and larger international projection as a result of our longer history and our intercontinental projection, we do have a much more spoken language that is seen as a booming economic resource (let me remind you that 100.000 American college students study Spanish in Spain)
However let me be frank, size of the economy is not relevant, what is relevant is competitiveness and we, either Italians and Spaniards lack of it. I would even say that Italy’s medium sized companies are much more competitive and are able to gain marketshare in other countries.
So finally let me point out a relevant example of what is happening. Alitalia and Iberia. Italy’s Gvt has not been able to privatize the company, still maintains heavily subsidiazed air routes just for the prestige and it is unable to change the management structure of the company despite losing a million euros a day. look at Iberia, it was downgraded to a middle player that is constantly growing and caring out a niche from the other European players.
I think it is a good lesson. Not too ambitious but still competitive.
As we say in Spain, future will place each of us where we ought to be.
Posted by: Gerardo del Caz | December 17th, 2007 at 6:20 pm | Report this commentIts already in the news. Eurostat figures for 2006 are already issued, and Spain has already surpassed Italy. OFFICIALLY confirmed. Just look the newspapers this week.
Spain was in 2006 105% EU27 average while Italy was 103%. Spain was richer than Italy in 2006 and now is ever richer and expected to be richer in forthcoming years. France was in 2006 only 6% richer than Spain and Germany only 9% richer.
Posted by: Roberto | December 18th, 2007 at 3:58 pm | Report this commentSpain is building a massive “Las Vegas-disneyland” hybrid in Aragon near Zaragoza.http://www.orlandosentinel.com/business/orl-iaapa1607nov16,0,3672283.story
Posted by: Spain | December 18th, 2007 at 5:57 pm | Report this commentPlease glorius hidalgos and british knights read this spaghetti news (in Italian if you can) and check the World Bank data……
http://www.corriere.it/economia/07_dicembre_19/no_sorpasso_1d7ba6b8-ae7b-11dc-8dc1-0003ba99c53b.shtml
Posted by: poor italian spaghetti eater | December 20th, 2007 at 8:30 am | Report this commentEurostat confirmed the “Sorpasso”. With current projections Spain will also surpass France and Germany in 5 to 6 years time and eventually become the country with the highest GDP per capita out of the five largest economies in Europe.
Spain already has a larger GDP per capita than Italy (G7 country) and a larger economy than Canada (G7 country). So the obvious question is,
when is Spain joining the G7?.
http://epp.eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_PRE…
Posted by: Mike Martin | December 22nd, 2007 at 8:15 am | Report this commentAll of you forget to consider that Italy has 58 million inhabitants while Spain has 40 million. That is why you need to consider GDP per capital PPS and not gross or national GDP as these figures do not take into account demographic trends and statistics.
Posted by: Claudio | January 2nd, 2008 at 8:34 am | Report this commentOn the other hand, all these indexes you’re citing need to be analysed and wheighed according to what they were intended to represent. Certainly, you can’t compare a country with another on the basis of just a few indexes and then decide which one is ahead and which one is not. Reality is far more complex.
I would agree with those writing that both Spain and Italy have to change. Both are heavily regulated economies, with mindboggling bureaucracies, and vested interests blocking much needed de-regulation. Just as an example, how ironic that in both countries attempts by the government to allow medicines to be sold in supermarket chains have stalled in the face of of farmacies’ union opposition. Nevertheless, I still believe Italy has more to learn from Spain than the other way round. Since the start of democracy, 30 years ago, Spain has had a series of prime ministers, all of which were in their early 40s when they began their term in office (Suarez, Gonzalez, Aznar, Zapatero) and all of which managed to stay in office long enough to carry through some coherent policies. By contrast, Italy has Prodi (69) and Berlusconi (71). Even if Spain gets a bloody nose in 2008 and further, the future bodes even worse for Italy. It would be much better if both compete for reform and renewal, in order to take up the challenge of globalisation with a fighting chance. As an example of how bad things can be in Italy, just have a look at the garbage collection strike in Neaples. It is very sad indeed that a country of such admirable sophistication, fascinating culture and ancient history cannot rid itself once and for all of the likes of the Camorra&Co.
Posted by: Moscow | January 5th, 2008 at 9:24 am | Report this commentRight now Spain enjoys an important asset neither Italy nor the UK has: a 1.8% Budget Surplus in 2007, compared to the Italy and the UK´s 2.4 and 2.7 Budget Deficit…
So we have some room to maneuver: from 1.8% surplus to 2.4% deficit there are 4.2 points of Government spending (infraestructure, R&D, social help…) which can keep consumer demand going.
Posted by: Enrique | January 5th, 2008 at 5:39 pm | Report this commentI am Spaniard, but still cannot see the point of this “mine is bigger” thread. As I see Spanish families in debt with variable loans for the next 40 years, it doesn’t relieve me that we surpassed Italy, or that the goverment is saving. Miopia and corruption have raised house price in Spain to a stupid level in a country so sparcely populated.
The Italians are even worse than us? I feel sorry for them. My father was a teacher in Barcelona. Just with his salary, we lived OK (5 member family). He could even buy a flat in the centre. I am also a teacher, so is my wife. Even combining our salaries, we cannot live in Barcelona. I suppose that all the money diverted from the hardworking thirtysomething generation to construction companies and banks helps to buy BAA or whatever.
On the bright side, I come to London often, and hang out with British folk. Near all of them would relocate in Spain or Italy if given a good chance, even without previous knowledge of the language.
Some pointless comments here to add a different perspective to the discussion. And yes, ours is bigger.
Posted by: Jacobo | January 6th, 2008 at 3:42 pm | Report this commentFerrari,
Lamborghini
Brembo
Armani
Gucci
Prada
Luxottica
Pininfarina
Pirelli
Bertone
Campagnolo
Alfa Romeo
Fiat
Zagato
Momo
Alessi
Illy
Segafreddo
Olivetti
Beretta
Novamarine
Aprilia
Ducati
DeLonghi
Vespa
I’d like to see a similar list for Spain. Thanks.
Posted by: Salvo | February 22nd, 2008 at 6:41 pm | Report this commentHmm, let’s see…
Wealth per Capita:
Italy: $119,704
France: $85,794
Spain: $68,693
External Debt:
Italy: $2,345 T
Spain: $2,047 T
Current Account Balance:
Spain: -126€ B
Italy: -57€ B
Counting Spain has the 2th highest account deficit in the world, Spanish external debt is soon going to surpass Italy.
Italy contributes €3 B to EU economy while Spain still gets €5 B from EU.
Even not to mention Italian inventions and arts. Italian culture dominates the world.
I also wonder what did Spaniards do for the humanity except for slaughtering hundred millions of innocent people in American continent.
Posted by: Riccardo | February 22nd, 2008 at 7:15 pm | Report this commentSpanish GDP per capita is getting closer with Italian GDP per capita because thousands of rich north Europeans have been settling down in Spain every year. Moreover Balears are owned by Brits and Germans.
Posted by: Riccardo | February 22nd, 2008 at 7:22 pm | Report this comment[…] Además la estadística no está actualizada. Todos sabemos que España tiene un PNB per cápita más alto que Italia […]
Posted by: alfredo reino » Archivo del Blog » Correlación entre religión y riqueza nacional | February 26th, 2008 at 3:54 pm | Report this commentIts really funny to see how italians can’t Stand at all Spain’s sorpasso. They are DYING of rage and envy.
Posted by: Kent | February 29th, 2008 at 1:04 pm | Report this commentThis is the latest eco news from Spain & Italy, very poor and poor. Yet, it’s early days, in my views the Spanish economy is about to fall of a cliff. All that GDP thanks to the housing boom which was both a catch up and driven by foreign demand (all those brits retiring etc…), that’s now a thing of the past with many flats empty, unable to sell, construction firms firing employees etc… The banks will probably suffer too given the high % of mortgage/construction related exposure yet so far Spanish banks are well regarded and seen as having done a good job managing risk and exposure. Time will tell - currently I find it hard believing any banks figures. But hopefully for Europe Spain doesn’t get too bad. As for Italy, well the extraordinary thing about the country is that somehow it keeps growing. Given the instable political system, which means there’s a new governement every 10 months or so, the mafia, the north south divide, etc… well it’s really amazing that Italy’s economy hasn’t imploded. While there’s much to improve, I would content that the global commodities boom particularly in agriculture will be helpful to Italy. Also, the South could still experience a construction/development boom at some point, it’s relatively sparsely populated and unspoiled compared to many places in the mediterranean (depends on what happens to the whole mafia situation, but signs are hopeful)
Posted by: fxtrader | March 3rd, 2008 at 10:18 am | Report this commentAs a wider point though, the worry for the Eurozone is that many countries seem to have stopped reforming once they got in. Hence giving the impression that they do not understand the economic policy straight-jacket that the Euro really is. For it to work, fiscal as well as structural reforms need to be carried out. Implosion of the Eurozone seems far-fetched, but as the price of bonds from Eurozone countries is reaching its widest spread ever, one cannot dismiss it entirely.
Well calling Spain a poor country is an absolutely misguided statement. Not only Spain is richer than Italy at least since year 2006 but France is only a 6% richer than Spain and Germany only a 9%. Eurostat and FMI figures.If Spain is poor UK is not a rich country neither.
Posted by: Kent | March 19th, 2008 at 12:06 pm | Report this commentYou british are very eager to talk about everybody’s else problems, but you frequently forget to talk about your own problems. UK is one of the countries more affected by the financial crisis. You dont want to talk about this but your banking system is far weaker than that of Spain. I would be very glad to see how this “poor” country called Spain buys some bargain banks on your own country at very cheap prices, yes this same “poor” country that bought Scottish power, Abbey bank, the telecom operator o2 or the Heathrow airport operator… yes, this same “poor” country thas is the world eight economic power and is about to catch up on France on a per capita basis…
Posted by: Kent | March 25th, 2008 at 9:00 am | Report this commentFor the Italians: you have to admit there is lots of work to do if you don’t want your economy to suffer even more in the next few years. Unfortunately Italian politicians suck big time.
For the Spaniards: Ok, you are doing well but humility is important too. Don’t be too proud of a situation that can reverse easily (think about Italy in the 80’s).
For the Brits: Don’t be arrogant. You have done well for many years but that doesn’t give you the moral authority to slash the rest of Europe as you often do.
For the French: I am partial here but I really hope Sarko falls in love with Ken Livingston and they move to a tunnel together (Victoria line maybe?)
Posted by: French justice | April 25th, 2008 at 1:53 am | Report this commentSpain’s poor? What source did you get this from? You can tell you’ve never visited Italy. It’s a beautiful country, rich with culture and different social backgrounds, but it also features some aspects which make it look much worse than Spain. Just try entering Rome in through the rough neighbourhoods.
I’d just like to point out that apart from that exception, all other sources seem to point in the same direction: Spain has overtaken Italy on GDP per capita, whether you like it, or not. This is definately clear for PPP ranks, and probably the same for nominal rates. Additionally, Spain’s Madrid is nearly twice as rich as Italy’s financial Capital Milan, and Barcelona is about 30 billion richer than both Milan AND Rome, regardless of the fact it is not the capital of Spain nor the financial or industrial centre of the Iberian Peninsula. Similarly Valencia and Seville feature in the ranks, very closely behind the BIGGER cities of Naples and Turin. Even if you don’t agree at this moment in time, you’ll have to face the fact that Spain is blossoming in a much larger scale than Italy.
P.S. I’m a Brit, not Spanish, but I even I know this; having visited both countries and simply watching the news, it’s easy to come to a conclusion. And I’m 14.
Posted by: Donovan Astley | May 11th, 2008 at 12:46 pm | Report this commentDonovan although I agree 100% with you you’ve got a pretty bunch of experience and economical knowledge for being a forteeniner. HARD TO BELIEVE!
Posted by: paul | May 12th, 2008 at 12:28 pm | Report this comment