BOP’s Current Account Adjustment in Greece, Italy, and Spain : The Socio-Economic Costs

During the 2008-2019 period Greece, Italy, and Spain managed to achieve substantial improvements in their CA balances. In Greece, the CA deficit shrunk from €36.6 billion to €2.7 billion, and in Italy and Spain the deficits were gradually transformed into surpluses. While the CA dynamics in Greece, Italy, and Spain may be considered a positive development in a narrow accounting sense, the key question concerns the circumstances on the national economy level that form the context of the CA changes. This paper addresses the issue by examining unemployment and wage indicators, GDP growth and GDP per capita, and consolidated government debt during the 2008-2019 period (2008 is the benchmark year). The results from the analyses show deteriorating socio-economic conditions and growing government debt in all three countries – thus making it abundantly clear that the positive developments in the CA balances have been achieved with substantial social and economic costs