Eurostat made a comparison between three indicators used in establishing the standard of living in 36 European countries: GDP per capita and the level of Actual Individual Consumption (AIC) balanced by the relative level of prices.
Thus, in 2023, Luxembourg and Ireland recorded the highest values of GDP/capita, being 139% and 111% above the EU average. Bulgaria is at the opposite end of the ranking, with a GDP/capita of only 64% of the EU average.
Romania came to be on a par with Poland concerning GDP/capita, with 80% of the EU average.
Results were more homogeneous in the case of actual individual consumption (AIC), but with significant differences between EU member states.
Romania is at 89% of the EU average in terms of actual individual consumption, one percentage point above Spain which is at 88% of the EU average.
The chart below shows states where GDP/capita is higher (or at least equal) relative to actual individual consumption:
Luxembourg recorded the highest level of AIC per capita in the EU, 38% above the EU average, as well as the highest price level, 52% above the EU average.
It was followed by EFTA (European Free Trade Association) country Norway, with an AIC/capita of 26% above the EU average.
While Luxembourg and Ireland stood out among EU states in terms of GDP, this was less obvious in the case of AIC.
This is owed to cross-border workers contributing to the GDP in Luxembourg, while their consumption expenditure is recorded in the national accounts of their country of residence. Ireland, with the second highest GDP/capita in the EU, recorded an AIC/capita 6% below the EU average.
As with the volume index of GDP/capita, the countries ranking concerning the volume index of AIC/capita shows a relative stability between 2013 and 2023. Luxembourg had the highest volume index among EU countries throughout the period, while Hungary and Bulgaria alternated their bottom positions.
EFTA country Norway and EU member states Ireland, Denmark, Finland, the Netherlands and Sweded had more than 20% above the EU average price levels.
Belgium, Austria, Germany and France were the other EU member states with price levels above the EU average.
Romania has the lowest price level in the EU
Italy, Spain, Estonia, Cyprus, Malta and Slovenia had a prices level less than 10% below the EU average, followed by Portugal, Greece, the Czech Republic, Latvia and Slovakia, with less than 20% below the EU average.
Lithuania and Croatia had a price level less than 30% below the EU average, followed by Hungary, Poland and candidate country Serbia, with price level less than 40% below this average. Candidate states Albania and Montenegro, followed by EU member Bulgaria, candidate countries Bosnia and Herzegovina had levels between 40 and 50% of the average. Candidate countries North Macedonia and Turkey had price levels 53% and 62%, respectively, below the EU average.
Romania had price levels between 50 and 60% of the EU average.
Exchange rate stability supported Romanians’ consumption
Exchange rates are crucial in determining prices levels and, subsequently, exchange rates shifts often have a large impact on prices levels development over time.
In fact, several of the major changes of prices levels analyzed between 2021 and 2023 can be at least partially explained by the fluctuations of a country’s currency against the euro. In 2022 and 2023, the national currency of Turkey recorded a large depreciation against the euro.
The Czech Republic registered the highest increase in price levels between 2021 and 2023.
Romania benefited from an almost fixed exchange rate, which kept prices relatively low compared to other countries, especially since we are a net importing country:
These figures show that, firstly and not at all surprisingly, price dispersion has been far less acute in the Euro zone than in the EU as a whole and in the group of 36 countries (which may be partially impacted by the volatility of exchange rates). Secondly, price levels have converged for all 36 countries over this period of three years.
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