The EU in the world - economy and finance
- Data extracted in March 2016. Most recent data: Further Eurostat information, Main tables and Database. Planned article update: June 2018.
The article presents indicators from various areas, such as national accounts, government finance, exchange rates and interest rates, consumer prices, and the balance of payments in the European Union (EU) and in the 15 non-EU members of the Group of Twenty (G20). It gives an insight into the EU’s economy in comparison with the major economies in the rest of the world, such as its counterparts in the so-called Triad — Japan and the United States — and the BRICS composed of Brazil, Russia, India, China and South Africa.
- 1 Main statistical findings
- 2 Data sources and availability
- 3 Context
- 4 See also
- 5 Further Eurostat information
- 6 External links
Main statistical findings
G20 members accounted for 85 % of the world’s GDP in 2014
In 2014, the total economic output of the world, as measured by gross domestic product (GDP), was valued at EUR 58.7 trillion, of which the G20 members accounted for 85.2 %, 4.5 percentage points (pp) less than in 2004. The EU-28 accounted for a 23.8 % share of the world’s GDP in 2014, while the United States’ share was 22.2 % (see Figure 1); note these relative shares are based on current price series, reflecting market exchange rates. The Chinese share of world GDP rose from 4.5 % in 2004 to 13.4 % in 2014, moving ahead of Japan (5.9 % in 2014). To put the rapid pace of recent Chinese growth into context, in current price terms China’s GDP in 2014 was EUR 6.4 trillion higher than it was in 2004, an increase higher than the combined GDP of the eight smallest G20 economies in 2014 (Australia, South Korea, Mexico, Indonesia, Turkey, Saudi Arabia, Argentina and South Africa). The shares of global GDP contributed by Brazil, India and Russia also grew significantly; an increase of 1.5 pp pushed Brazil from the tenth place in 2004 to the fifth place in 2014 (leaving aside the four G20 EU Member States), while an increase of 1.0 pp helped India and Russia become respectively the sixth and seventh largest G20 economies in 2014, up from the 8th and 11th place in 2004.
China and India had the highest GDP growth between 2004 and 2014
Figure 2 shows the real growth rate (based on constant price data) of GDP in the EU-28 compared with the other G20 members between 2004 and 2014 — note the different scales used for the three parts of the figure. The lowest rates of change were recorded by Japan, the EU-28, the United States and Canada, while the highest rates were recorded in the two Asian economies of China and India.
Among the G20 members, the highest gross national income (GNI) per capita in 2014 was recorded in the United States, followed by Saudi Arabia (2013 data). Note that the conversion to United States dollars (USD) used for this indicator in Figure 3 is based on purchasing power parities (PPPs) rather than market exchange rates and so reflects differences in price levels between countries. The average level of income per capita in the United States was 3.7 times as high as the average GNI for the world. Saudi Arabia, Canada and Australia also recorded average GNI per capita that was at least three times the world average, followed by Japan, the EU-28 and South Korea where it was more than twice as high. By contrast, five G20 members recorded levels of GNI per capita that were around or below the world average, namely Brazil, China, South Africa, Indonesia and India.
In broad terms, members with relatively low GNI per capita recorded relatively high economic growth over the 10 years from 2004–14; this was most notably the case in China and India. By contrast, members with relatively high GNI per capita in 2014 recorded fairly low levels of economic growth over the same period; this was most notably the case in Japan, the United States, Canada and the EU-28. Saudi Arabia reported an atypical pattern of development, combining a relatively high level of GNI per capita (that by the end of the period was almost as high as that in the United States) with the second highest growth in GNI per capita during the period 2004–14 among the G20 members, an average of 8.0 % per year. The reverse situation could be observed in Mexico which reported relatively low growth of GNI per capita (0.7 % per year) with a relatively low level of GNI per capita.
General government finances
The financial and economic crisis of 2008–09 resulted in considerable media exposure for government finance indicators. The importance of the general government sector in the economy may be measured in terms of general government revenue and expenditure in relation to GDP. Subtracting expenditure from revenue results in a basic measure of the government surplus/deficit (public balance) which measures government borrowing/lending for a particular year; in other words, borrowing to finance a deficit or lending made possible by a surplus. General government debt (often referred to as national debt or public debt) refers to the consolidated stock of debt (external obligations) at the end of the year of the government and public sector agencies. The external obligations are the debt or outstanding (unpaid) financial liabilities arising from past borrowing. Typically, these indicators are expressed in relation to GDP.
The average of general government revenue and expenditure in relation to GDP peaked among the G20 members in 2014 at 46.7 % in the EU-28 (in the euro area it was higher still, at 48.1 %), followed by 38.9 % in Japan, 38.8 % in Russia (in 2013) and 38.6 % in Canada. The lowest ratio was recorded in Mexico (24.5 %, in 2013). Note that the data for Argentina, Brazil, China, India, Indonesia, Saudi Arabia and South Africa are not available.
Most G20 members recorded a government deficit in 2014
Most G20 members had a government deficit in 2014. South Korea was the only country that recorded a surplus (see Table 1), while Mexico and Russia, two countries for which data are not available for 2014, recorded a surplus in 2013. Some of the G20 members with the highest government deficits had as well the highest levels of government debt and this was notably the case for Japan and the United States. Mexico and Turkey (data for 2013 and 2011 respectively) were among countries with moderate debt levels and deficit/surplus close to a balance. Three countries had government gross debts higher than their GDP in 2014; the ratio of gross debt to GDP stood at 108 % in Canada, 123 % in the United States up to 247 % in Japan.
South Korea recorded an increase in government surplus between 2004 and 2014
Comparing data for 2004 with 2014 (see Figure 4), South Korea was the only G20 country (among those for which data are available), which saw its surplus expanding, while the surpluses of Russia and Mexico shrank close to a balanced position (2013 data for both). Turkey (period from 2006 to 2011), Canada and Australia moved from smaller surpluses to deficits. The government deficit of the United States slightly decreased, whereas the deficit of Japan remained essentially at the same level. The same was true for the EU-28, even though the deficit of the euro area also slightly decreased.
Japan and the United States recorded the largest increases in government debt between 2004 and 2014
All G20 members for which data are available recorded higher levels of general government gross debt relative to GDP in 2014 than in 2004, ranging from an increase of 6.8 pp in Mexico to an increase of 28.0 pp in Australia, with the United States (increase of 44.1 pp) and Japan (67.8 pp) above this range (see Figure 5).
Balance of payments
Saudi Arabia recorded the largest current account surplus relative to GDP
The current account of the balance of payments provides information on international transactions in goods and services (see the article on international trade for more details), as well as income from employment and from investment, and current transfers with the rest of the world. Among the G20 members, the largest current account surplus in 2014 in absolute terms was EUR 208.8 billion for China, while in relative terms the current account surplus peaked in Saudi Arabia at 9.8 % of GDP (see Figure 6). The largest current account deficit in 2014 was EUR 295.1 billion for the United States, while Turkey’s deficit represented 5.5 % of GDP.
The current account balance of Argentina, Canada, Indonesia and Brazil moved from surpluses to deficits between 2004 and 2014, while the EU-28 moved from a small deficit to a surplus. The deficits of Australia and the United States narrowed over the period under consideration, while they expanded for Mexico, South Africa and Turkey. In South Korea the surplus expanded while those of Saudi Arabia, Russia, China and Japan narrowed.
Foreign direct investment
Foreign direct investment (FDI) is characterised by investment in new foreign plant/offices, or by the purchase of existing assets that belong to a foreign enterprise. FDI differs from portfolio investment as it is made with the purpose of having a lasting interest, by acquiring control or an effective voice in the management of the direct investment enterprise.
The highest inflows of FDI were recorded in the emerging markets and resource rich members
Among the G20 members, FDI outflows exceeded inflows in 2014 in Russia, Japan, South Africa, the United States and South Korea (see Figure 7). Relative to GDP, the highest inflows of FDI were recorded into Brazil, Canada and Australia, a mixture of emerging economies and resource rich members. Outflows of FDI relative to GDP were highest from Canada and Russia, followed at some distance by Japan and South Africa. As such, Canada figured among the G20 members with the highest inflows and outflows. Australia recorded negative outflows of FDI, indicating that disinvestment (of investment made abroad in previous years) outweighed new investment abroad.
Table 2 introduces the stocks and flows of FDI into and out of the EU-28. The United States maintained in 2014 their position as the main partner for the EU-28 with respectively 34.5 % of outward stocks and 39.5 % of inward stocks from the rest of the world.
In terms of FDI flows, the picture is quite different. EU-28’s FDI outflows towards the United States recorded a negative value in 2014, which means that disinvestment (of investment made abroad in previous years) exceeded new investment in the United States; the same holds true in the opposite direction, albeit to a lesser extent. The highest values of EU-28’s outward FDI were recorded in 2014 with Brazil and Canada, while Canada was also the largest source of FDI inflows into the EU-28. A relatively large part of the EU-28’s FDI flows were with offshore financial centres (an aggregate composed of 38 financial centres across the world), as well as with developed countries outside of the G20.
Consumer prices, interest and exchange rates
Figure 8 shows the annual rate of change in consumer price indices (CPIs) between 2005 and 2015 for the G20 members and the world. Note the different scales used for the three parts of the figure. Consumer price indices indicate the change over time in the prices of consumer goods and services acquired, used or paid for by households. They aim to cover the whole set of goods and services consumed within the territory of a country by the population.
The worldwide inflation rate increased between 2005 and 2008 (to peak at 6.4 %) before dropping sharply during the global financial and economic crisis. Inflation increased again to peak at 5.2 % in 2011 before declining to finish in 2015 at the rate of 3.2 %, lower than it had been 10 years earlier. For several years during this period Japan recorded negative annual inflation rates, indicating falling consumer prices (deflation), a situation that was mirrored in China and the United States in 2009 during the financial and economic crisis.
Prices more than doubled in Argentina, Russia, Turkey and India between 2005 and 2015
Between 2005 and 2015, the general level of prices more than doubled in Argentina (2013 data), Russia, Turkey and India. The inflation rate was particularly high in Russia in both 2008 (14.1 %) and 2015 (15.5 %), in Indonesia in 2006 (13.1 %) as well as in South Africa (11.5 %) in 2008. Apart from Russia, inflation rates among the G20 members ranged in 2015 from a low of 0.0 % in the EU-28 to 9.0 % in Brazil. Note that the data for Argentina in 2014 and 2015 are not available.
The EU recorded relatively low inflation rates over the 2005–15 period with an average of 1.9 %; Canada (1.7 %) and Japan (0.3 %) were the only countries recording averages that were lower, while an average inflation rate in the United States (2.1 %) was close to the EU level.
By far the largest fall in interest rates between 2004 and 2014 was in Brazil
Central bank short-term interest rates varied greatly between the G20 members in 2014, but to a somewhat lesser extent than they had done 10 years earlier. Rates were below 1.00 % in the euro area and in the United Kingdom and were 1.22 % in Japan. Elsewhere, rates ranged from 3.00 % in Canada to 12.61 % in Indonesia, with the rates in Argentina (24.01 %) and Brazil (32.01 %) exceeding this range. In nearly all G20 members interest rates were lower in 2014 than they had been in 2004, with the exception of China where the rates were essentially the same (increase of 0.02 %) and Argentina, where the rates rose by some 17 pp to 24.01 %. By far the largest fall in interest rates during this period was in Brazil.
Among the G20 members, the peso in Argentina, rand in South Africa, lira in Turkey, rupee in India, rouble in Russia and rupiah in Indonesia devalued the most between 2004 and 2014 relative to the euro (see Table 3). By contrast, the Chinese renminbi, Brazilian real, the Australian and Canadian dollars and South Korean won appreciated relative to the euro during this 10-year period. Relative to the United States dollar, the euro appreciated by 6.8 % between 2004 and 2014.
Data sources and availability
The statistical data in this article were extracted during March 2015.
The indicators are often compiled according to international — sometimes global — standards, for example, UN standards for national accounts and the OECD’s standards for balance of payments statistics. Although most data are based on international concepts and definitions there may be certain discrepancies in the methods used to compile the data.
EU and euro area data
Most if not all of the indicators presented for the EU and the euro area have been drawn from Eurobase, Eurostat’s online database. Eurobase is updated regularly, so there may be differences between data appearing in this article and data that is subsequently downloaded. Data concerning interest rates in the euro area have been extracted from the European Central Bank (ECB).
G20 members from the rest of the world
For the 15 non-EU G20 members, the data presented have been extracted from a range of international sources, namely the International Monetary Fund, the United Nations Statistics Division and the World Bank. For some of the indicators shown a range of international statistical sources are available, each with their own policies and practices concerning data management (for example, concerning data validation, correction of errors, estimation of missing data, and frequency of updating). In general, attempts have been made to use only one source for each indicator in order to provide a comparable analysis between the members.
An analysis of the economic situation can be performed using a wide range of statistics, covering areas such as national accounts, government finance, exchange rates and interest rates, consumer prices, and the balance of payments. These indicators are also used in the design, implementation and monitoring of economic policies.
Gross domestic product (GDP) is the most commonly used economic indicator and it provides a measure of the size of an economy. It is the sum of the gross value added of all resident institutional units (‘domestic’ production) engaged in production, plus any taxes, and minus any subsidies, on products not included in the value of their outputs. It is also equal to i) the sum of the final uses of goods and services (all uses except intermediate consumption), minus the value of imports of goods and services; ii) the sum of primary incomes distributed by resident producer units. By contrast, gross national income (GNI) is the sum of gross primary incomes receivable by residents, in other words, GDP less income payable to non-residents plus income receivable from non-residents (‘national’ concept).
GDP per capita is often used as a broad measure of living standards, although there are a number of international statistical initiatives to provide alternative and more inclusive measures (such as GDP and beyond). GDP at constant prices is intended to allow comparisons of economic developments over time, as the impact of price developments (inflation) has been removed. The use of a time series of GDP in constant prices shows the volume (or ‘real’) change in GDP. Equally, international comparisons can be facilitated when indicators are converted from national currencies into a common currency using purchasing power parities (PPPs — named 'International USD' for the purpose of this publication) which reflect price level differences between countries rather than market exchange rates.
Further Eurostat information
- The EU in the world 2016
- The European Union and the African Union — 2014 edition
- Asia-Europe Meeting (ASEM) — A statistical portrait — 2016 edition
- Key figures on the enlargement countries — 2014 edition
- Pocketbook on Euro-Mediterranean statistics — 2013 edition
- The European Union and the BRIC countries
- The European Union and the Republic of Korea — 2012
- Main GDP aggregates (nama_10_ma)
- GDP and main components (output, expenditure and income) (nama_10_gdp)
- Balance of payments statistics and International investment positions (bop_q)
- Euro area balance of payments (source ECB) (bop_q_euro)
- European Union balance of payments (bop_q_eu)
- European Union direct investments (bop_fdi)
- EU direct investments - main indicators (bop_fdi_main)
- Exchange rates (ert), see:
- Bilateral exchange rates (ert_bil)
- Euro/ECU exchange rates (ert_bil_eur)
- Euro/ECU exchange rates - annual data (ert_bil_eur_a)
- Euro/ECU exchange rates (ert_bil_eur)
- Government finance statistics (EDP and ESA2010) (gov_gfs10)
- Annual government finance statistics (gov_10a)
- Government revenue, expenditure and main aggregates (gov_10a_main)
- Government deficit and debt (gov_10dd)
- Government deficit/surplus, debt and associated data (gov_10dd_edpt1)
- HICP (2005 = 100) - annual data (average index and rate of change) (prc_hicp_aind)
- Balance of payments
- Exchange rates
- GDP and beyond
- Government finance statistics
- Harmonised Indices of Consumer Prices (HICP)
- Interest rates
- National accounts (including GDP)
Source data for tables and figures (MS Excel)
- European Central Bank
- International Monetary Fund IMF
- United Nations Statistics Division
- World Bank