Bloomberg: Southern European countries showed economic growth

Greece, Spain and Portugal, once considered the “headache” of Europe, plunged into crisis and are now ahead of other countries in economic indicators.

As the Bloomberg news agency noted in its report, the states have become the best-performing countries in the region, with growth rates double the eurozone average and much higher than many of their neighbors. Growth in Spain and Greece is expected to exceed 2% this year, compared with 0.8% in the eurozone. Germany, the region's largest economy, will grow modestly.

The period of crisis reinforced the view that Southern Europe was irresponsible, lazy and unproductive.

Now everything has changed. Governments, as well as businesses and households, are confident that growth will not be short-lived, Bloomberg notes. Much of the growth is due to tourism and the increase in the number of visitors after the pandemic, but this is not the only factor. The multi-year consolidation plan also put the economies of these countries on a stronger footing.

“The uncertainty for Greece and the rest of southern Europe has now disappeared,” said Nikos Vettas, director general of the Foundation for Economic and Industrial Research in Athens. “This does not mean that we can fold our hands; there is still a lot to be done. However, the lack of uncertainty is the most important factor as it has led to capital and labor outflows in the past,” he stressed.

Greece, for example, lost a quarter of its output during the decade-long crisis and its debt soared.

But the country regained investment status last year and its debt-to-GDP ratio fell to its lowest level in more than a decade. Evidence of how the situation has changed was the downgrade of France by S&P Global Ratings last month.

Debt ratio Portugal in recent years, with the exception of the pandemic period, it has also tended to decline (after growing to an unacceptable level). Moreover, investor fears that dominated the bond market a decade ago have subsided.

Italy remains the exception to this story, with its larger economy lagging somewhat behind its southern European neighbors and making less financial progress.

“For four countries – Italy, Greece, Spain and Portugal – there are certain things that are true, such as a sense of financial stability and stabilization of bond spreads,” said Valentina Meliciani, professor of applied economics at Rome's Luis University. “But when it comes to economic development, there are some differences. Italy was unable to stabilize its debt,” the expert added.

As noted, mass tourism and lower-cost manufacturing continue to account for the largest share of the GDP of southern European economies. Performance growth is also accelerating in higher-margin sectors such as biotech services.

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