The European sovereign debt crisis was a pretty interesting time. Eurozone nations were biting and clawing at each other, the Euro was plummeting like a wounded bird, wolfish investors were circling maimed banks, and the IMF was floundering around like a fish out of water. It was a jungle, and behind my trading station, I liked to think I was Tarzan.
Among the crisis’ many belligerents it was the PIIGS – Portugal, Ireland, Italy, Greece, and Spain – that brought on most of the era’s drama, and now, six years later, we decided to take a look at them and see how they’re doing. Here are the PIIGS, six years on:
Portugal: While it’s still struggling under austerity, Portugal seems to have escaped Greece’s fate by posting respectable growth numbers the past few years. However, its socialist government seems to have very few options left as far as juicing growth is concerned, and its plan to increase spending and cut taxes could break EU regulations, which would then cause another serious batch of problems for the nation. These issues are reflected on its volatile bond yields, that and the Bank of Portugal’s recent lowering of its 2016 growth target to 1.5%.
Ireland: If any country can show that PIIGS can fly, Ireland can. By writing off most of its bank debts, embracing austerity, and focusing on exports in anticipation of a sinking euro, Ireland has been growing at an impressive speed. In fact, it grew 6.9% in 2015 – on par with what Beijing said China had gained. Gross public debt as a percentage of GDP has also been tumbling, which is something very few countries could say. Given all that, inflows into Irish ETFs have been robust, and so have foreign direct investment.
Italy: Italy’s a bit of a puzzle. Prime Minister Matteo Renzi has so far been doing the right things (he even helped close one of 2015’s largest IPOs) and its economy has been showing signs of picking up, yet a real, solid recovery in tune with its accomplishments remain elusive. Exports – which have traditionally saved the nation from recession – have been lackluster despite the weak euro, though on the flip side, unemployment and its budget deficit have been shrinking. Either way, Renzi’s government seems worried that Italy might not get back on its feet before the world enters a cyclical downturn. It probably should.
Greece: Well, Greece is still Greece, in fact I count at least three articles today referring to a “Greek crisis” of some sort. To be completely fair though the nation has surprised the world quite a few times ever since that Grexit bit. There was a month last year in which Greece’s industrial production grew faster than anyone else’s in Europe, and just last week, its public spending eked out a tiny surplus. Greek ETFs even attracted some $290 million in inflows 2015. They’re still getting pissed on by the Eurocrats though.
Spain: It may not have a government and its unemployment rate is still pretty nasty, but otherwise, Spain has a lot to go Ole! about. An oil-led rise in disposable income has in turn fueled a rise in retail sales, while the recent attacks in countries such as Egypt and Turkey has spurred welcome increases for its tourism industry. Business lending is also on the up, and so is mortgage production, all signs of a healthy economy. On the flip side, its GDP growth remains below pre-bust levels, and its economy is currently on track to decelerate.
Photo: Albert Mestre
