Spain and Portugal forget the crisis. Now they are the ones growing the most

to’Europe It will grow at two speeds in 2024, but the surprise is which countries will run faster.

Spain and Portugal They seem destined to lead. EU recoverywhich finally reversed their position at the bottom of the Old Continent’s economy.

Data on Bill 2023 The outlook for this year is clear: both countries have left decades behind them calamity And high debts, focusing on one of them Growth of about 2% Which makes recession-hit Germany look dwarfed by France, which has just entered the club of EU-imposed sanctions for excessive deficits.

a Tourism sector recovery After the pandemic crisis, lower dependence on Russian energy supplies compared to other EU countries – such as Germany – and more cautious management of the national debt helped Spain and Portugal change course. the Spanish and Portuguese economyaccording to the latest forecasts from the European Commission, will grow by a sequential percentage 2.1% and 1.7% 2024 after concluding 2023 with a brilliant performance equivalent to a recovery of more than 2%.

With bond spreads remaining largely contained and others’ expectations Interest rate cuts by the European Central BankSpain and Portugal’s momentum could still improve. Analysts agree that the countries of southern Europe, which almost led to the dismantling of the euro during the 2012 financial crisis, are now the engines of the region. The examples of Madrid and Lisbon seem to confirm this.

The economic miracle in Spain

The latest events and macroeconomic data attest to this excellent situation The health of the Spanish economy: The country has avoided entering the EU’s excessive deficit measures by targeting it Reduce the deficit to 3% By 2024.

This plan is supported by higher than expected economic growth, It is estimated at 2.5% this year.After the economy beat expectations and showed a 0.8% recovery in the first quarter of 2024.

According to the report Eurozone economic forecasts for the third quarter Recently published by S&P Global, Madrid does not only highlight the post-pandemic normalization of the economy tourismbut also constantly expanding industrial production.

“in the last year, Consumer Expenses It was the main driver of growth, adding 1 percentage point to the 2.5 percentage point increase in Spanish GDP. The decline Earlier and sharper than energy prices Compared to other major eurozone economies, support from government measures partly explains the stronger recovery in consumer spending.he wrote the note.

Analysts also pointed out that Spanish household debt has shrunk. They are now no more indebted than their German counterparts, with a debt-to-income ratio of 85% compared to 128% in 2012.

Excellent re-opening of services, tax reform that favored raising revenues by taxing the rich, Winning energy blend Not relying excessively on Russian gas are these success factors, in addition to government moves in favor of the most vulnerable citizens.

Last Tuesday, the Spanish government approved A Anti-inflation aid package It is worth nearly 3 billion euros, which includes measures such as income tax cuts for minimum-wage workers and Zero VAT extension On goods such as food.

These measures should stimulate demand and consumption, and boost economic growth. For 2025, the EU plans to GDP at +1.9% in Spain.

Portugal’s Revenge

After closing 2023 with a 2.3% growthI Portugal It is also expected to record a significant recovery in 2024. The European Commission forecasts a 1.7% increase in GDP this year, with an even better performance in 2025 (+1.9%).

Moreover, in 2023 Public debt decreased Less than 100% of GDP (it was 98.7%) and the highest level was recorded Budget surplusThis is the highest level reached since the fall of the dictatorship in 1974.

In its forecast, the European Commission confirmed the positive trend of Portuguese public finances. The estimate is a percentage Continuous reduction of public debt/GDPalbeit at a slower pace. “Expected primary balance surpluses and positive interest growth rate spread are expected to reduce the ratio to 95.6% in 2024 and 91.5% in 2025.”we read in the European Union document.

Expert analysis indicates that Portuguese economy Witness a golden moment thanks to exports et al tourism Who broke all records: 2023 was the best year in history, with more than 30 million visitors and revenues of 25 billion euros.

Not only that, in the nine years he spent in government, Socialist President Costa stood out for his desire to contain public spending And always keep accounts balanced in order to comply with European requirements. Budgetary stringency, which was only halted during the pandemic to deal with extraordinary expenditures during the health emergency, has improved the country’s image, which is now… It is highly regarded by international rating agencies And by European Union institutions.

However, the currency has its downside. The obsession with i Budget surplus It has been eroded Purchasing power of the middle classes André Freire, a political scientist at the University Institute of Lisbon, commented on the quality of public services.

It happened in the last two years Protests continue About deteriorating healthcare and education, as well as complaints about a lack of public investment, which government leaders now hope to make up for with Next Generation EU funds.

the Portuguese economic turning point It has begun, but there are still many economic challenges to face.