Enlargement countries - economic developments

Data extracted in February 2019.

Planned article update: April 2020.

Highlights

In 2017 the Turkish economy was by far the largest in terms of its output among the EU enlargement countries.

Turkey had the highest level of GDP per capita among the enlargement countries, at 20 000 PPS per inhabitant in 2017.

In 2017, Montenegro was the only enlargement country where services accounted for close to three quarters (72.2 %) of gross value added, a similar share to that recorded in the EU (73.3 %).

Gross domestic product (GDP) per capita, 2017

This article is part of an online publication and provides information on a range of economic statistics for the European Union (EU) enlargement countries, in other words the candidate countries and potential candidates. Montenegro, North Macedonia, Albania, Serbia and Turkey currently have candidate status, while Bosnia and Herzegovina and Kosovo [1] are potential candidates.

The article provides macroeconomic information from national accounts, including the principal measure of economic activity, gross domestic product (GDP), as well as an analysis of gross value added by economic sector and GDP by expenditure component.

Full article

Gross domestic product

GDP at current prices in the EU-28 stood at EUR 15 383 billion in 2017. The economic output of the enlargement countries was considerably lower, as together the seven countries for which data are presented in Table 1 generated EUR 841 billion of GDP in 2017 (including 2016 data for Bosnia and Herzegovina); as such, the output of the enlargement countries was equivalent to about one eighteenth (5.5 %) of the EU-28’s GDP.

Table 1: Gross domestic product (GDP), 2007-2017
Source: Eurostat (nama_10_gdp) and (prc_ppp_ind)

The Turkish economy was by far the largest among the enlargement countries

Turkey accounted for the largest share of the GDP created among the enlargement countries, some EUR 754 billion in 2017. While the EU-28 economy was 20 times as large as the Turkish economy, GDP in Turkey was nearly 20 times as high as in Serbia (EUR 39 billion), which — using this measure — was the second largest economy among the enlargement countries. The level of GDP in the remaining enlargement countries ranged from EUR 15.3 billion in Bosnia and Herzegovina (2016 data) down to EUR 4.3 billion in Montenegro.

GDP per capita

GDP per capita is often used as a measure of living standards or competitiveness within an economy. This measure has the advantage that it may be used to analyse the economic performance of countries with different sizes.

Turkey also had the highest level of GDP per inhabitant, about two thirds that recorded in the EU-28

In 2017, GDP per inhabitant (expressed in purchasing power standards (PPS) and therefore adjusted to take account of price level differences between countries) averaged 30 000 PPS across the EU-28. This was 50 % higher than the level recorded in Turkey, which posted the highest GDP per capita among the enlargement countries, at 20 000 PPS. There was a relatively low degree of variation across the remaining enlargement countries, as GDP per inhabitant lay within the range of 9 100 PPS (Albania) to 13 700 PPS (Montenegro). Note there are no data available for Kosovo in PPS terms but that its GDP per inhabitant was EUR 3 600 in 2017; this was below the range for the other enlargement countries, as the next lowest level was recorded in Albania (EUR 4 000 per inhabitant).

Figure 1 shows GDP per capita in current price euro terms for 2007 and 2017, an interval during which in the EU-28 it rose from EUR 26 100 to EUR 30 000, equivalent to an increase of 15 %. Among the enlargement countries, Turkey recorded the highest GDP per capita in euro terms in both 2007 and 2017. By this measure, GDP per capita in Turkey rose by 34 % over the period 2007-2017 to reach EUR 9 400. During the same period, GDP per capita in euro terms increased by 60 % in North Macedonia, 57 % in Montenegro, 54 % in Albania, and by 47 % in Bosnia and Herzegovina (2007-2016); in Serbia, the increase of 30 % was slightly smaller than the increase in Turkey, but still double that recorded in the EU-28.

Figure 1: Gross domestic product
(GDP) per capita, 2007 and 2017
(EUR)
Source: Eurostat (nama_10_gdp), (nama_10_pe), (nama_10_pc) and (demo_gind)

Expenditure components of GDP

Table 2 provides an analysis of the development of GDP components from the expenditure side, showing: general government expenditure, the final consumption expenditure of households and non-profit institutions serving households (NPISH), gross capital formation, and the external balance between exports and imports.

Table 2: Expenditure components of GDP, 2007 and 2017
(% relative to GDP)
Source: Eurostat (nama_10_gdp)

Final consumption expenditure of households and non-profit institutions serving households contributed 55.6 % of the EU-28’s GDP in 2017, while the share of general government was 20.1 % and that of gross capital formation was 20.6 %. The external balance of goods and services contributed 3.8 % to the EU-28’s GDP.

Across the enlargement countries in 2017, the relative share of expenditure by households and non-profit institutions serving households was higher than in the EU-28, while that of general government was usually lower, although Bosnia and Herzegovina reported a share (21.0 %; 2016 data) for general government that was slightly higher than that recorded in the EU-28. Two of the enlargement countries — Serbia and Bosnia and Herzegovina — reported that investment accounted for a similar share of their GDP as it did in the EU-28, while the remaining countries (no data available for Turkey) reported notably higher shares for gross capital formation. The enlargement countries also had negative trade balances: whereas the EU-28’s trade surplus was equivalent to 3.8 % of GDP in 2017, among the enlargement countries the deficits ranged from 4.5 % of GDP in Turkey to 25.8 % of GDP in Kosovo.

Real GDP growth

The global financial and economic crisis gathered pace during the second half of 2008. It affected the EU-28 and most of the enlargement countries (see Table 3). GDP decreased (in real terms) by 4.3 % in the EU-28 in 2009, with a rebound in activity in 2010 and 2011. Despite a mixed picture across the EU, the effects of the economic crisis and subsequent sovereign debt crises were still being felt in several of the EU Member States in 2012 and 2013 and this was apparent as there was a small fall (-0.4 %) in EU-28 GDP in 2012, followed by a modest increase (0.3 %) in 2013. There were signs of an upturn in economic activity in 2014, as real GDP growth was 1.8 %, with this accelerating to 2.3 % in 2015 and stabilising at 2.0 % in 2016 and 2.4 % in 2017.

Table 3: Real GDP growth, 2007-2017
(% change compared with previous year)
Source: Eurostat (nama_10_gdp)

Albania and Kosovo escaped the full impact of the financial and economic crisis

The impact of the global financial and economic crisis on the enlargement countries varied depending on each country’s economic structure and the nature of its financial and international trade relations with the rest of the world. Those countries most integrated into the global economy tended to be most affected by the crisis: for example, there was a relatively large contraction in economic activity in Turkey in 2009 (down 4.7 % when adjusted for price changes). On the other hand, in some of the smaller economies that are less exposed to the global economy — for example, Albania or Kosovo — real GDP growth continued to follow a positive development in 2009.

In 2010, there was economic growth in all seven enlargement countries, which more than made up for the downturn in 2009 in North Macedonia and in Turkey. The Turkish economy grew by 8.5 % in 2010 and this pattern of renewed growth continued in 2011 with a further real increase of 11.1 % (the highest growth rates among the enlargement countries for 2010 and 2011). In keeping with the positive developments in the EU-28 for 2010 and 2011, there was real GDP growth in each of the enlargement countries during both of these years. The slight fall in economic output in the EU-28 in 2012 (-0.4 %) was also apparent in four of the enlargement countries (Montenegro, North Macedonia, Serbia, and Bosnia and Herzegovina), while real GDP growth rates recorded for the remaining three enlargement countries were consistently lower than they had been in 2011. In 2013, there was a return to real GDP growth in all of the enlargement countries and this pattern continued during the period from 2014 to 2017, with the exception of Serbia, where GDP fell by 1.6 % in 2014. The latest data available, concerning 2017, show real growth among the enlargement countries ranging from 0.2 % in North Macedonia to 7.4 % in Turkey.

Gross value added

Services accounted for a smaller share of economic output in the enlargement countries than in the EU

In 2017, services accounted for almost three quarters (73.3 %) of total gross value added in the EU-28. This share was higher than in any of the enlargement countries, where the relative weight of services ranged from 54.4 % (Albania) to 72.2 % (Montenegro) — see Table 4.

Table 4: Analysis of gross value added by economic activity (NACE Rev. 2), 2007 and 2017
(% of total gross value added)
Source: Eurostat (nama_10_a10)

The relative importance of services to the enlargement economies rose between 2007 and 2017 in five of the enlargement countries, the exceptions being North Macedonia and Turkey. The biggest increases in percentage point terms were recorded in Albania (3.2 points), Montenegro and Serbia (both up 2.7 points).

Table 4 also shows that agriculture, forestry and fishing accounted for a considerably higher share of economic output in the enlargement countries than it did in the EU-28. In 2017, agriculture, forestry and fishing contributed 1.7 % of the EU-28’s total value added, while its share among the enlargement countries ranged from 6.9 % in Turkey to 11.4 % in Kosovo and 21.7 % in Albania.

In a majority of the enlargement countries, industry accounted for a similar proportion of total value added in 2017 as it did in the EU-28 (19.6 %). There were three exceptions, two where the share of industry was relatively low — Albania (13.2 %) and Montenegro (11.2 %) — and one where it was relatively high — Serbia (26.5 %).

Data sources

Data for the enlargement countries are collected for a wide range of indicators each year through a questionnaire that is sent by Eurostat to partner countries which have either the status of being candidate countries or potential candidates. A network of contacts in each country has been established for updating these questionnaires, generally within the national statistical offices, but potentially including representatives of other data-producing organisations (for example, central banks or government ministries). The statistics collected in this annual exercise are available free-of-charge on Eurostat’s website, together with a wide range of other socio-economic indicators collected as part of this initiative. Note that in 2016, it was decided to stop collecting national accounts data using the questionnaires, instead relying on information that was collected by Eurostat’s unit responsible for national accounts. Alongside Eurostat’s regular collection of national accounts data from EU Member States and EFTA countries, the enlargement countries provide national accounts data directly to Eurostat and these data have been used in this article. These statistics are also available free-of-charge on Eurostat’s website.

The European system of national and regional accounts (ESA) provides the methodology for national accounts in the EU. Data for the EU-28 and the enlargement countries were compiled under ESA 2010, which is fully consistent with worldwide guidelines for national accounts, namely, the United Nationssystem of national accounts (the 2008 SNA).

All statistics presented in this article as monetary values are based on current price series unless otherwise stated.

GDP is the central measure of national accounts, which summarises the economic position of a country (or region). It can be calculated using different approaches: the output approach; the expenditure approach; and the income approach.

An analysis of GDP per capita removes the influence of the absolute size of the population, making comparisons between different countries easier. GDP per capita is a broad economic indicator of living standards.

A PPS is an artificial currency unit; theoretically, after taking account of price level differences between countries, one PPS should buy the same amount of goods and services in each country.

The calculation of the real annual growth rate of GDP is intended to facilitate comparisons of the dynamics of economic development both over time and between economies of different sizes, regardless of price developments.

The main aggregates of national accounts are compiled from institutional units, namely non-financial or financial corporations, general government, households and non-profit institutions serving households (NPISH). Within the expenditure approach, only households and NPISH and government have final consumption (corporations are considered to have intermediate consumption). Private final consumption expenditure is defined as expenditure on goods and services for the direct satisfaction of individual needs, whereas government consumption expenditure includes goods and services produced by government, as well as purchases of goods and services by government, that are supplied to households as social transfers in kind. Gross capital formation is the sum of gross fixed capital formation, the change in inventories (stocks) and the net acquisition of valuables. The external balance is the difference between exports and imports of goods and services. Depending on the size of exports and imports, it can be positive (a surplus) or negative (a deficit).

Tables in this article use the following notation:

Value in italics     data value is forecasted, provisional or estimated and is therefore likely to change;
: not available, confidential or unreliable value.

Context

National accounts provide an internationally agreed standard for compiling measures of economic activity through a coherent, consistent and integrated set of macroeconomic accounts. These accounts record how economic activity is distributed among businesses, consumers, government and foreign countries, detailing key items such as production, consumption, savings and investment. The use of internationally accepted concepts and definitions permits an analysis of different economies, such as the interdependencies between the economies of the EU Member States, or a comparison between the EU and non-member countries.

Within the EU, multilateral economic surveillance was introduced through the stability and growth pact which provides for the coordination of fiscal policies. Economic statistics have become one of the cornerstones of global, regional and national governance, for example, to analyse national economies during the financial and economic crisis or to put in place EU initiatives such as the European semester or macroeconomic imbalance procedures (MIP). Indeed, economic policies are central to the Europe 2020 strategy which seeks to turn the EU into a smart, sustainable and inclusive economy.

While basic principles and institutional frameworks for producing statistics are already in place, the enlargement countries are expected to increase progressively the volume and quality of their data and to transmit these data to Eurostat in the context of the EU enlargement process. EU standards in the field of statistics require the existence of a statistical infrastructure based on principles such as professional independence, impartiality, relevance, confidentiality of individual data and easy access to official statistics; they cover methodology, classifications and standards for production.

Eurostat has the responsibility to ensure that statistical production of the enlargement countries complies with the EU acquis in the field of statistics. To do so, Eurostat supports the national statistical offices and other producers of official statistics through a range of initiatives, such as pilot surveys, training courses, traineeships, study visits, workshops and seminars, and participation in meetings within the European Statistical System (ESS). The ultimate goal is the provision of harmonised, high-quality data that conforms to European and international standards.

Additional information on statistical cooperation with the enlargement countries is provided here.

Notes

  1. This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo declaration of independence.
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