Tuesday, 2 July 2013

Italy and Germany - Which Economy is More Resilient?

Our quarterly analysis of  Eurostat 's macroeconomic data has been recently updated. We can no present data relative to Q3 2012. In particular, we'd like to draw attention to two economies, Italy and Germany. In a previous blog we have shown how the Italian economy is more resilient than that of Germany. With the new data the tendency is confirmed. 

However, this time we'd like to show the corresponding Complexity Landscapes, illustrated below:

What is striking is that the entropy of the German economy is around 210 while that of Italy is just over 135. This means that the numbers reflecting the the country's economy (i.e. Eurostat's data) is significantly more scattered (chaotic) than that of Italy.  What this means is that Germany is closer to its critical complexity (see red zone in above figure) than Italy. This is reflected in the rating - Italy has three stars (resilience of 79.2%) while Germany is a two-star economy (resilience 67%).

Resilience - the capacity to withstand shocks and extreme events - is independent of performance. An economy can be thriving while be very fragile at the same time.