Is Europe Heading For Long-Term Stagnation?

bigstock-Isometric-Europa-Crisis-32567831Recent news (August, 2014) speaks of slowing economy in Germany and of France, where economy has come to a virtual standstill. Our complexity and resilience analysis of the Eurozone and its member states shows, moreover, that the  Eurozone, seen as a system, is not out of the crisis yet. In actual fact, complexity, which measures the “vitality” of a system, is showing a tendency to shrink. While this remains to be confirmed over the next two-three quarters, this is not a good omen. The figure below illustrates the evolution of complexity of the 15 core EU economies, as well of the 13 members from Central and Eastern Europe.

EU_Q1014The evolution of resilience is showing a very similar trend. Central European economies present, once again, a more fragile situation.

EU_R_Q1014The evolution of the complexity of Germany, which has been enjoying a constant upward trend since 2010, is pointing to a totally new situation. Again, the evolution over the new few quarters will confirm if this is indeed a tendency or a local discontinuity. This situation is not surprising. The resilience of the German economy has been relatively low (substantially lower, for example, than that of Italy). One must keep in mind that high performance does not necessarily imply high resilience. An economy can perform well but, at the same time, be fragile, with the ability to suddenly produce surprising behavior.


The interactive Business Structure Maps of all the EU 28 member states may be navigated here.

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