Southern European Economies to Experience 1.7% Growth Between 2023 and 2025
The economies of Southern Europe (Spain, Greece, Italy, and Portugal) are expected to experience an average growth rate of 1.7% between 2023 and 2025, nearly double that of the eurozone.
This recovery marks a turning point after years of difficulties related to successive financial crises. According to a review by QNB bank, three main factors explain this improvement: the rebound of tourism, increased competitiveness, and the reduction of financial imbalances.
Firstly, the end of pandemic-related restrictions has triggered a boom in the tourism sector. Tourist arrivals and revenues have increased by 15 to 20%, stimulating the economy of Southern European countries, where tourism represents between 8% and 20% of GDP. This rebound also has a multiplier effect, reinforcing demand in other economic sectors.
Secondly, the economies of the region have gained competitiveness. Thanks to adjustments in labor markets, labor costs have decreased, making products and services more attractive on an international scale. This has enabled the manufacturing sector in these countries to grow, whereas it was declining in other regions of the eurozone.
Finally, the reduction of household and corporate debt has strengthened financial stability. This decrease in debt has allowed for an increase in private investments, a crucial element in supporting sustainable growth.
QNB bank highlights that these three combined factors contribute to the economic recovery of Southern Europe, offering better prospects for the future.
