QNB Discusses Growth Revival of South European Economies

Doha, September 14 (QNA) - QNB said that it expects the economic growth of South European countries like Spain, Greece, Italy, and Portugal to continue outperforming the Euro area. In its weekly report, QNB noted that South European economies suffered heavily since the advent of the global economic crisis mainly as a result to their large public and private debt as well as their rigid labor markets. From 2007 to 2022, the real GDP of those countries grew just 0.1 percent a year compared to the 1 percent of the Euro Area as a whole. "On the back of cyclical and structural factors. Over the period 2023-2025, real GDP growth is expected to average 1.7 percent, almost double the 0.9 percent of the Euro Area," QNB said before noting that there are three reasons why the strong growth is set to continue. The first was that the end of the Covid-pandemic sparked a boom in tourism that provided a boost to those countries, where tourism has a large overall impact on the economy, ranging from 8 percent to 20 percent o f their respective GDP. "The spending of tourism workers and firms acts as a multiplier in the rest of the economy," the bank added. The second factor was that those countries saw an improvement in their competitiveness compared to the most manufacturing-intensive economies in the Euro Area, partly because they were better insulated from the energy crisis due to the Russo-Ukrainian war given they are less related on Russian gas imports. The third reason was that the deleveraging process in the private sector and the improvement of sovereign debt sustainability reduce financial instability fears and restore investor confidence. The average ratio of private sector credit to GDP in the four countries has fallen by 0.65 percent. from its peak of 134 percent in 2011 to the current levels of 69 percent. "All in all, the South European Economies are set to outperform again this year with expected average real GDP growth of 1.6 percent, compared to 0.8 percent for the Euro Area, on the back of a boom in tourism, improved relative competitiveness, as well as the correction of financial imbalances," the report concluded. (QNA) Source: Qatar News Agency