Do you remember the terrible acronym coined by the Anglo-Saxon economic press in 2008 that grouped together the 5 “weak” countries of the Eurozone? Portugal, Italy, Ireland, Greece and Spain.
Well, about fifteen years later these nations have taken a nice revenge, we must say.
Don’t you believe it?
- In the years since Covid onwards they have been among the most dynamic economies in the Eurozone. Greece and Portugal in particular have been able to grow at speeds more than double the average thanks to lively internal dynamics, reforms, relaunching of sectors, growth in tourism. Then Italy and Spain came out. This graph by Oddo BHF shows us clearly the huge difference in growth.
- The level of interest rates that these countries have to pay to finance themselves has returned to or below the Eurozone average. The Bloomberg chart is impressive and shows us how the situation has changed drastically from the critical period 2010 – 2015 to today. Portugal, Ireland and Spain pay less or as much as France. We are still the tail light with our debt burden but the infamous “spread” is a fraction of what it was then.
Today the country under observation is another: France.
The dynamics of domestic politics, economics and debt are worrying. The country is growing slowly (2023 0.9%, this year even less), the debt/GDP ratio has risen to the 115% area (on par with Spain and above Portugal), the results of the last political elections have shown the level of social unease and malaise present in the country.
It will not be easy for the country to get out of this real impasse, which is also exacerbated by the high level of protection, unionization and statism of the transalpine economy. Market rates are currently expressing limitedly, also considering that a downgrade on the country’s creditworthiness could arrive in the coming months. And so, as the English speakers would say: beware FROGS!
