That is the question Luis Garicano asks in his recent post. He relies on projections from the 2025 IMF World Economic Outlook.
On the positive side, Eastern European countries’ economies are likely to converge with the US.
While we have spent a decade complaining about Europe’s stagnation, a real positive convergence story has been unfolding at the eastern edge of the continent. Poland entered the millennium at 34% of US per capita GDP; by 2030, the IMF projects it will reach 67%. Romania rises from 27% to 60%. Lithuania moves from 29% to 69%. Bulgaria goes from 23% to 53%. These countries’ citizens are still significantly poorer than Americans. But they have closed a large part of the gap with the global frontier. Across Central and Eastern Europe, the EU has functioned as a powerful convergence machine for countries willing to use it.
Conversely, Western–and especially Southern–European economies are likely to lag behind the US.
Meanwhile, at the other end of the continent, the picture is almost the mirror image. Portugal slipped from 64% to 57%. Spain fell from 72% to 61%. The richer laggards are more striking: France dropped from 86% of the US level to 71%, and Italy fell from 93% to 68%.
Of course, these are just projections, but lagging productivity and an aging population could be highly problematic for Western Europe. Do you agree with the IMF forecasts?
