Wealth in Central and Eastern Europe on the upswing
According to the findings of the GfK survey, European consumers have a total of around €8,000 billion to spend from their household net income.
This corresponds to an average purchasing power, or disposable income, of around €11,998 per capita across the 40 countries surveyed. This figure includes state payments such as unemployment benefit, child support allowance and pensions. With an average purchasing power of €27,521 in Switzerland and Liechtenstein and €27,395 in Luxembourg, these three countries are still Europe’s oases of affluence. With €18,055 in disposable annual income, Germany ranks in 10th place, behind Austria and France. Moldova has the lowest purchasing power with a per capita average of €685 per annum, corresponding to just a fortieth of the purchasing power of Swiss citizens.
The booming Emerald Isle
Ireland is currently recording the strongest growth in Western Europe. Since 2003, purchasing power has risen by around 30%. Over the same period of time, German purchasing power has risen by around 9%, a figure achieved in Ireland over the past year alone. In the purchasing power rankings, the Emerald Isle has gone from being in sixth place in the previous year to fourth place this year, recording per capita income of €22,207. In County Dublin, the 506,211 residents earn an average €23,680 per annum. By way of comparison, the citizens of Hamburg have purchasing power of almost a quarter less with €19,225 and the average “Berliner” has over 40% less a year with just €16,508. Stuttgart and Düsseldorf, with a per capita purchasing power of €20,499 and €21,755 respectively, also lag well behind Dublin. Residents of the Irish capital, however, are trumped by Munich’s population, which earn an average €24,674 annually.
Remarkable growth rates in Central and Eastern Europe
Latvia’s purchasing power has improved, moving up four places in the purchasing power ranking and the country is now in 25 place. Similarly, it’s Baltic neighbors Estonia, Lithuania and also Serbia-Montenegro have all climbed up the rankings. Nothing has changed at the bottom of the purchasing power table, but per capita purchasing power is also developing positively in the low income countries. For example, since last year purchasing power in the Ukraine has increased by approximately 26%, more than in any other country. In 2007, Ukrainians have around €300 more disposable income than in 2006. Slovenia, the most affluent of the countries to join the EU in 2004, shows a purchasing power level, which is only about €1,000 beneath that of Portugal, whose average yearly income per capita is €9,674.
Reversal of the East-West gap
Residents of all 23 districts of Hungary’s capital city, Budapest, have more money per capita than the population of the municipality of Freienbessingen in the German state of Thuringia, for example. The residents in the Lithuanian capital city are also €500 better off this year than the residents of Freienbessingen. In Hungary, residents of the town of Héviz, the most prosperous municipality on Lake Balaton, have a per capita purchasing power of €7,762, which is over 40% above the national average and considerably higher than that of poorer municipalities in France, for example in the third arrondissement of Marseille.
Furthermore, in the capital cities of the Baltic states, purchasing power is above the national average - in Vilnius, Lithuania, by almost 30% and in Riga, Latvia, by around 25%. Residents here have more money than those of Agerola, the Italian municipality with the weakest purchasing power, which is almost two thirds below the national average.
Neighboring areas often showing strong contrasts
The purchasing power gap between various locations or regions of the countries of Central and Eastern Europe is often significant. For example, the population of Bratislava, Slovakia’s richest municipality, has almost twice as much money as the inhabitants of Bucharest, Romania’s wealthiest municipality. Similar occurrences may even be observed in a single country. For example, in the UK, residents of the most affluent district, City of London, have on average €10,000 more than the second most affluent district, Kensington and Chelsea: The 9,200 residents of the City of London have a per capita purchasing power of €48,456 compared with “just” €38,426 per annum for the 196,000 residents of Kensington and Chelsea. (see tabell)
The study “GfK Purchasing Power Europe” is conducted every year and covers 40 European countries. Calculations differentiate down to municipal level and zip code areas. The purchasing power determined represents the net annual income including state benefits. The 2007/2008 survey will be available from the end of November, updated in terms of data and regions. The GfK Purchasing Power Europe is used internationally for sales and expansion planning, branch optimization and financial controlling. (spatialnews.geocomm.com)
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.