Euro area public debt likely dropped in 2015

Euro area’s public debt is expected to have declined last year for the first time since 2007, although by just one percentage point. The budget balance of the currency bloc is likely to further rebound, staying above 2% in 2015, noted Societe Generale. This will be the first time since 2007 that t he public debt ratio of the euro area falls to 91.1pp of GDP.

Nation wise the picture is mixed. Public surplus of Germany rose further to 0.6% of 2015, whereas deficit in Spain rebounded just slightly, staying at 5.2% of GDP, further away from the target of 4.2%. Meanwhile, Italy’s and France’s fiscal balances also rebounded slightly 2.7% and 3.5% respectively. Surprisingly, Irish public deficit is expected to have narrowed to 1.1% of GDP from 3.9% in 2014, mainly due to strong economic growth in 2014-2015, added Societe Generale.

The data will be quite vital for Greece. The actual fiscal gap of the euro area for 2015 will be based on last year’s primary balance. This is expected to give more boost to the current talk between the EU Commission regarding the appropriate target for Greece.