Icarus In Pictures

Developing the theme of The Icarus Effect that we outlined in a recent post (see post), we are now starting to amass data that allows us to demonstrate the point graphically. For example, the following graph appeared in a recent article in The Economist (see article):

The graph shows the economic performance of the Baltic States since accession to the EU, along with a forecast of economic performance into 2009. From 2004 to 2007, the three nations (Latvia, Lithuania, and Estonia) performed well above the EU average (GDP growth between 7% and 12% per annum). In 2007 this performance nosedived. Between 2007 and 2009 (forecast), GDP is set to fall substantially, between -8% and -12%, with no clear view as to where the bottom is likely to be. A performance well below the EU average.

This is The Icarus Effect in action. Those economies flying high at the beginning of the decade are now starting to crash in a spectacular fashion. However, it is not the economic consequences if this that grab our attention. It is the political (and social) fall-out that will mark this phenomenon.