Eurostat analysis of the EU prices. Romania’s position

de Marin Pana | 19.12.2016 .

supermarket-euroEurostat has published an analysis of the price levels in the European countries that allows comparisons regarding the purchasing power and shows where we are compared to our colleagues from the EU.

To calculate the coefficients that allow such comparisons costs have been collected and processed for more than 2,400 products and services under a joint program with the organization of countries with developed economies, OECD.

1- What PPPs and PPS mean and how to use them

Purchasing power parities (abbreviated PPPs) are indicators of price differences between countries. They provide conversion between values expressed in the national currency and a common artificial currency called Purchasing Power Standard (PPS). This PPS eliminates the effects of price differences and allows comparison of purchasing powers at international level.

For GDP, using the nominal exchange rates would cause the overestimation of its real level in the countries that have higher prices compared to countries with lower prices. Using PPPs brings nominal values to a common denominator and allows a fairer comparison of the volume of national economies between countries, at a uniform price level.

Let’s take a telling example. For example, according to the provisional statistics, Romania registered in 2015 a GDP / capita of 7,800 euros. Adjusted based on the purchasing power parity of 51% of the EU average, it led to a real level of 15,300 euro / capita, if considered the prices close to half of the EU average, compared to 26,500 euro / capita.

What we should retain for now is that we have a GDP in euros close to almost 30% of the EU average and only the relatively low price level (51.2% of the EU average now) positions us at the GDP / capita level of 58%, widely publicised. In fact, we don’t have 58% of the European money, but it is as if we would have money. Just because we can buy with this 30% at home exactly what an European who has 58% of the EU GDP can buy at their home, on average.

It follows that we must be careful with the prices that will anyway get slowly (hopefully) close to the EU average as much as the amounts received, special caution, in euro, not in lei.

That’s because there is one more factor stabilized about five years ago, the euro / leu exchange rate, which is in fact floating and may significantly change at any time.

2-How price indices look like at the European

We present below a selection of price indices that translate the nominal values, mostly expressed in euros, to the values that correctly reflect the purchasing power in PPS. That, with the view to evaluate how much more expensive are certain groups of products or services, from the perspective of a common household, across the EU.

Note that, accidentally or not, the only Western developed countries that negotiated an accession clause allowing them not to adopt the single European currency (the UK and Denmark) or blocked de facto transition to euro (Sweden) are precisely the same countries with the highest price indices. It means that revenues are impacted the most by the relatively high prices compared to actual purchasing power.

tabel1-6-e1481728524385

*

Price indices in the EU countries (%, 2015 selection, EU average = 100)

Country           Price index      Food    Clothing           Energy            Home appliances

*

Also, it should be noted that the price tone at the continental level is set by the EU’s economic locomotive, Germany, despite the high prices for energy that its citizens must tolerate to support the competitiveness of its economy.

With a lower standard of living, Italy confirms and largely sets the benchmark price in the EU. Noteworthy for us is that these countries are also the main Romania’s foreign trade partners.

Surprisingly somehow, the Eurozone is positioned slightly below the EU average, based on the lower levels of a smaller groups of products that have not been included in the table (it has 95% of the average price in the alcoholic beverages and tobacco category, 99% in footwear, 98% in furniture, carpets, etc. and 98% in consumer electronics). Of course, the Eurozone enlargement process in the recent years, with countries where prices are lower, played an important role.

Right below the EU average are positioned, again accidentally or not, several countries facing serious economic problems, the Iberian Spain-Portugal and the Mediterranean Greece-Cyprus pairs. It proves that it is not very well to enter the Eurozone and align the prices before having a solid enough economy, with a steady growth and able to absorb shocks.

3- Useful findings for us

Finally, an important remark should be made, especially for Romanians who already have a relatively good standard of living, from the national perspective.

It can be seen how prices tend to rise as a country develops, meaning that GDP growth is going to erode at individual level. It means that as we move more money between pockets or accounts, we might find that there is not so much we can do with them, more than in the current situation.

Until 2008, the process of price convergence, mathematically quantified by some complicated coefficients to which is pointless to refer, was real. The crisis has caused some delay and even a return to the divergence of these prices, which helped us increase GDP / capita to the equivalent of 58% of the EU average. Generalized resumption of the economic growth in the EU countries brought the process of convergence back to the pre- 2008 path and Romania will be no exception.

Publicat la data de 19.12.2016 .

Lasa un comentariu


SIMILAR ARTICLES

Marin Pana

Romanians’ actual individual consumption –  at 63% of EU average. Eurostat says we have surpassed Croatia and caught up with Hungary

Romania has reached 63% of the EU 28 average living standard in 2016, according to the actual individual consumption indicator (AIC), according to the data released by Eurostat By the more familiar way of measuring the living standards, consisting of GDP per capita at the purchasing power parity, we are at 59% of the EU average Our country has caught up with Hungary, surpassed Croatia and ...
Read more »

Marin Pana

About how much money would political circus cost. Concrete figures

The average for the first five months of 2017 of the long-term government loans was 385%, while for the last five months of 2016 it was 322%, significantly lower The matter is NOT just about bigger or smaller decimals since for a public debt of 376% of GDP at the end of 2016, applying this interest rate means annual payment obligations of 121% of GDP Interest rate for long-term ...
Read more »

Adrian N Ionescu

GfK: Retail businesses will grow in Romania five times more than European average in 2017

Dynamics of turnover in retail sector in 2017 The turnover growth rate of the retail units in Romania will be of 10% this year, far above the average of 15% in the EU countries and five times more the EU27 average (excluding the UK), according to a report by the market research firm GfK, released on Tuesday "The champion countries of last year are in the forefront in 2017 as ...
Read more »

Adrian N Ionescu

Energy security – left at disposal of Russians and winter: Committee for Industry from Chamber of Deputies is working to cancel obligation to make natural gas stocks

  Natural gas suppliers will no longer be obliged by the Romanian Energy Regulatory Authority (ANRE) to make stocks for the coming winter if the Parliament adopts a draft law that is now at the Committee for Industry of the Chamber of Deputies "The security of gas supply is to be ensured by a strategic reserve that should be established by Transgaz (TNG), which operates the national ...
Read more »

Adrian N Ionescu

Germany & France / Romania’s economic relations with key reform EU players

The transatlantic tour de force of Romanian diplomacy has been marked first by the political references, but Romania's economic partnership with France and Germany gets new meanings, in view of the fact that the EU's biggest powers except for the UK (EU27) are determined to decisively set the future and the new architecture of the EU The President of Romania met on Monday with the Chancellor ...
Read more »


NEWS

Mugur Isarescu – Explicit position: Save and grow SMEs. Economy is unbalanced. National currency "is where it should"

The Governor of the National Bank of Romania, Mugur Isarescu (foto), has launched harsh allegations against the policy of encouraging consumption, which has unbalanced the ... Read more

ANAF arms itself: Starting Friday, June 23, electronic garnishment system is functional

The National Agency for Fiscal Administration announces on Friday that “electronic garnishment” – the system for communicating the enforcement documents to credit institutions by electronic ... Read more

Romania still has time until November to persuade EU about hosting European Medicines Agency

Current headquarters of the European Medicines Agency The decision on the relocation of the European Banking Authority and the European Medicines Agency from London has ... Read more

Uzina Moreni and Rheinmetall signed documents for establishing joint venture to produce armored conveyors

Prototype previously produced at Uzina Moreni The Ministry of Economy announced on Thursday that Uzina Automecanica Moreni and the German military technology provider Rheinmetall signed ... Read more

Siegfried Muresan has detailed 2018 EU draft budget in Bucharest. Second tier MFP personnel seems to not understand European funds stake

MEP Siegfried Muresan (photo) acknowledged on Friday in Bucharest that member states had an unexpectedly difficult start in accessing the European funding under the new ... Read more

Political crisis /Leu-euro exchange rate, at lowest average since referendum to dismiss Traian Basescu

The National Bank of Romania (BNR) announced an average rate of 4.5872 lei on Thursday, following the sharp depreciation in the first part of the ... Read more

Investments in economy in Q1 2017 - below 2013 level. Issue: Diversion of growth from production to consumption

  In the first quarter of 2017, the net investments in the national economy amounted to 12,836.9 million lei, representing a decrease of 3.1% compared ... Read more

Official proposal: Below 90,000 euros, abuse of office is not a criminal offense

Florin Iordache’s views have been fought also in the past PSD Deputy Florin Iordache, former Justice Minister, said on Thursday that the 200,000-lei threshold for ... Read more

All Romanian commercial attachés from abroad have been convened back to country for an analysis of activity

Alexandru Petrescu, Minister for Business Environment The Ministry for Business Environment, Commerce and Entrepreneurship has asked Romania’s commercial attachés from Romanian embassies to come to ... Read more

"Ciolos amendments" to "Dragnea unitary pay law": Wage pay game or how to deceive 1 million people without even blinking

The evolution of the draft unitary pay law on wages for employees from the public sector and the final version of the law passed by ... Read more

Unitary pay law for state employees - approved by Chamber of Deputies. Increases are postponed - final version

A vote. (Photo: Agerpres) The Chamber of Deputies adopted on Wednesday the bill on pay law with 188 votes in favour, 28 against and 47 ... Read more

EY European attractiveness survey: Romania, 4th in European ranking of new jobs created in 2016 by foreign investments

Romania ranks 12th in the European Top foreign investment by the number of projects started in 2016 and fourth by the number of jobs created ... Read more

CNP: Dazzling rates of economic growth at country regions level for next years. Over 6% annually, in North-East and Centre regions

The Bucharest-Ilfov region will continue to have the highest net monthly average wage per employee in the next four years but will register the lowest growth ... Read more

"Cathedral Plaza Ordinance": Government expands Gabriela Firea's rights for issuing building permits, including in monument protection areas

The Government approved on Wednesday an emergency ordinance to amend an article in the Law on authorizing construction works and extended the categories of works ... Read more

Draft law/Companies, forced to declare who controls them behind offshore front companies. Reporting threshold, reduced to 10,000 euros

Banks and other credit institutions will report all transactions worth more than 10,000 euros equivalent, according to a draft law launched by the National Office ... Read more

CFA Romania: Analysts' confidence in economy has improved, but is far from peaks registered last year and in 2015

* Macroeconomic confidence index * The macroeconomic confidence index of CFA Romania increased to 60.8 points in April, considerably above the previous month (by 4 ... Read more

Prevention Law: Infringers get maximum 90 days to resolve irregularities and authorities have new obligations

Infringer entrepreneurs will have maximum 90 calendar days to correct the irregularities identified, according to the draft Prevention Law discussed on Thursday by the Government. ... Read more

Romanian Commodities Exchange accuses an attempt to "nationalize natural gas trading" behind which is Iulian Iancu

The management team of the Romanian Commodities Exchange (BRM) launched on Wednesday a public call to PSD to reject what they called an “attempt to ... Read more

Members of Chamber of Deputies approved salary increases provided by OUG 2/2017: + 20% for doctors, policemen and civil servants. Students lose free travel with CFR but receive scholarships during vacation

Deputies voted in favour (232 votes in favour, 21 against and 1 abstention) of the bill approving the Government Emergency Ordinance 2/2017 on fiscal and ... Read more

EC forecasts for Romania: Economic growth revised downward to 4.3% in 2017. Budget deficit: 3.5% of GDP

The European Commission (EC) revised downward the estimate of Romania’s economic growth in 2017, to 4.3%, according to the spring economic forecast released on Thursday. ... Read more

Commissioner Corina Cretu says Romania has lost funding for Transportation equivalent to a Pitesti-Sibiu highway cost

Romania loses EUR 1 billion in the transportation field, money that could have been spent in the 2007-2013 financial period, says the European Commissioner for ... Read more

Ministry of National Defence has received approval from Parliament to start 8 programs of military endowment

Defence Minister Gabriel Les (photo) announced on Wednesday that the Romanian Parliament sent the Ministry of National Defence the prior approval for launching the eight ... Read more

New method of payment for VAT on public procurement, explained by Minister of Finance: Italian model

The 2017-2020 convergence program approved Friday by the Government includes the measure of introducing a split VAT payment mechanism as of 1 July. The Minister ... Read more

Oil price increase, cost and investment cuts, as well as "pole tax" elimination doubled net profit of OMV Petrom in first quarter compared to Q1/2016

OMV Petrom (stock symbol SNP) posted a net profit of 619 million lei (attributable to shareholders), 113% higher in the first quarter of 2017 than ... Read more

"Romanian model" for the Sovereign Fund: investments in "small projects with high rolling speed"

The Government is in a hurry and building the Sovereign Fund for Development and Investment (FSDI) so that it can come to fruition as quickly ... Read more

<
cheap ray ban sunglasses outlet cheap oakley outlet sale cheap Ray Ban sunglasses online cheap Ray Ban sunglasses outlet uk Cheap Ray Bans Outlet cheap ray bans sale cheap ray ban glasses Ray ban sunglasses for cheap cheap ray ban sunglasses cheap ray ban glasses outlet cheap ray ban glasses cheap oakley sunglasses outlet Wholesale oakley sunglasses cheap oakley sunglasses online occhiali da sole ray ban clubmaster oakley Italia ray ban italia
fake id california fake id online maker texas id best state for fake id fake id review illinois fake id fake id usa reddit fake id how to get a fake id how to get a fake id buy usa fake id buy fake id fake school id connecticut fake id cheap fake id best fake id fake id maker fake id god fake id website Fake id generator Fake id Fake id maker reddit fake id/ how to make fake id fake drivers license/ best fake id